Since August, especially after the National Bureau of Statistics released July macroeconomic data, the previously widespread market view that the macroeconomy was severely weak seems to be changing, which has also led the market to alter its expectations for steel price declines. Driven by the correction of these poor expectations, rebar prices have recently rebounded strongly, breaking through previous important resistance levels in one move and overall entering a stronger range. Whether this round of rebar price increases can be sustained and how much upside remains are still topics of market concern.

　　First, from the steel supply side, the latest data from the China Iron and Steel Association show that average daily crude steel output in early August was 2.1437 million tons, up 2.84% from the previous ten-day period, with crude steel output once again rising to a relatively high level above 2.1 million tons. Although the period has entered the off-season for steel consumption, relatively good recent steel price performance has alleviated steel mill profit levels to some extent. Under such circumstances, steel mills are not very willing to halt production for maintenance, ultimately breaking the pattern in which peak average daily crude steel output occurs in April-May each year. Judging from current market conditions, relatively high crude steel output may become the norm for the market for some time to come.

　　Second, from the steel demand side, in January-July, the cumulative year-on-year growth rate of newly started floor space in China was 8.4%, a significant rebound from the first half of the year. At the same time, the opening of Xinhu Zhongbao's private placement shows that the new government's thinking on real estate market regulation is gradually changing, namely from previously controlling demand to increasing supply. Of course, against the overall macro backdrop of structural adjustment, the intensity of supply increases will also tend to be moderate, and correspondingly, real estate increments are unlikely to return to the previous high growth of more than 10%. In addition, the China Railway Corporation has begun to increase this year's railway fixed asset investment scale to 660 billion yuan, and private capital is also expected to gain access to railway investment. However, the seemingly good demand-side data need to be verified from another angle, namely cement output. Generally speaking, cement is mainly used in infrastructure construction and, to a certain extent, forms a so-called "complementary good" with rebar. At the same time, because cement is not easy to store, cement output to a certain extent represents cement demand, meaning cement output can better represent the real demand of the downstream construction industry. Looking at China's cement output in July, it was 211.8 million tons, a certain decline from June. This actually shows that downstream demand in the steel industry has not improved much, and the steel price increases seen in the market are more a correction of the poor expectations at the beginning of the year; their sustainability is still questionable.

　　Finally, from the perspective of iron ore prices, among the various products in the steel industry chain, iron ore prices were the first to rebound in this round and showed relatively strong performance, with prices once surging above $140/ton and hitting a six-month high. The strong rise in ore prices this round was due, on the one hand, to the improvement in market expectations described above, and on the other hand, mainly because steel mills' restocking behavior pulled up demand for iron ore. The number of days of iron ore inventory at steel mills quickly climbed from the lowest 24 days in June to 27-28 days recently. Calculated according to the current average daily crude steel output, the 3-4 days of additional iron ore inventory at steel mills convert to about 13.7 million tons of iron ore, meaning newly added iron ore inventory demand of nearly 14 million tons. This further confirms why China's iron ore imports in July hit a record monthly high of 73 million tons, while port iron ore inventories still remained generally stable. Therefore, the strong rebound in ore prices this round was partly due to expectation correction, but more mainly the result of increased demand caused by steel mills' restocking. After this round of restocking by steel mills ended, ore prices have recently also shown a lack of momentum for further increases.

　　According to the logic above, in the period ahead, even if there is some improvement on the demand side, after nearly a month of expectation correction, the market will return to calm. Moreover, given China's severe steel overcapacity, the upward elasticity of steel output supply is far greater than the upward elasticity of end-user demand. Under such circumstances, relatively high crude steel output will still be the main factor constraining steel prices in the future. In addition, macroeconomic risks remain, and during the downward cycle of the real economy as a whole, the market should not harbor excessively high hopes for an overall macroeconomic upturn.

　　Therefore, with the macroeconomy in a downward cycle and overcapacity in the steel industry, steel prices are still likely to maintain a wide-ranging oscillation over the next six months. The upper bound of the range has risen to around 4,000 points, while the lower bound has also risen to around 3,500 points.