Market Overview
Global commodity markets were on edge this week due to escalating tensions in the Middle East. The collapse of the first round of US-Iran negotiations, marked by significant disagreements over nuclear issues and control of the Strait of Hormuz, has led to expectations of a tug-of-war state involving “pressure tactics alongside negotiations.” Consequently, international crude oil prices surged by over 8%, driving a rebound in upstream raw materials such as iron ore and coking coal. Against this backdrop, China’s domestic ferrous futures market saw a “cost-driven” slight rebound, while the steel spot market remained cautious, showing a divergence of “strong futures, stable spot.” Industry analysts believe the steel market is entering an oscillating pattern defined by the game between “strong cost support” and “weak real demand.”
Geopolitical Risks Drive Costs; Raw Materials Supported by Sentiment
According to the linked content, geopolitical risk is currently the primary source of market volatility. Reports indicate that the US will implement a blockade on “all maritime traffic entering and exiting Iranian ports” starting at 10:00 AM ET on the 13th, covering all Iranian ports in the Persian Gulf and Gulf of Oman. Although the statement noted that “vessels transiting the Strait of Hormuz to and from non-Iranian ports will not be disturbed,” tension in the waters has escalated sharply.
Analysts interpret that any potential blockade or navigation risk in the Strait of Hormuz—the world’s most critical energy transport artery—will directly impact crude oil supply expectations, causing international oil prices to skyrocket. As the anchor of commodities, rising crude oil prices increase global transportation and energy costs, which then transmit to the entire industrial chain, including iron ore and coking coal.
Today’s futures data reflects this logic:
Iron Ore main contract rose 9.5 points to close at 763.5 (+1.26%).
Coking Coal main contract rose 7 points to close at 1066.0
Coke main contract rose 10.5 points to close at 1648.5 (+0.64%).
The strength in upstream raw materials provides clear cost support for downstream finished steel prices.
Demand Shows Signs of Stabilization, but Recovery is Moderate
Compared to the turbulent external environment, the domestic demand side is showing slow and preliminary signs of stabilization. Real estate sales data cited in the link shows that as of April 13, 13 major property developers with published data achieved total sales of 120.628 billion yuan in March 2026. Although this represents a 9.3% year-on-year decline, it is a significant 145% increase month-on-month from February. The market interprets this as a sign of marginal warming in real estate sales, driven by the traditional spring “Little Yangchun” peak season and continuous policy tailwinds.
Analysts believe the real estate industry has undergone a prolonged deep adjustment. Continuous signals from policymakers to stabilize the housing market are helping to gradually restore market confidence. Rigid housing demand still exists, and the overall market decline is expected to narrow, gradually achieving stabilization. This is a potential positive factor for the demand of construction steel (such as rebar and wire rod) which is closely related to real estate. However, the high month-on-month growth is partly due to the low base effect of the February Spring Festival, while the year-on-year negative growth indicates the recovery foundation is not yet solid. The industry remains in a phase of adjustment and bottoming out, meaning the pull on steel demand will be slow and moderate.
Divergence Between Futures and Spot; Spot Prices Mostly Stable with Individual Adjustments
Although the futures market strengthened on cost-push expectations, the spot market has been more rational and cautious. According to steel quotation data from major cities nationwide today (April 13), the market was generally stable with localized fluctuations.
Rebar:The average price of 20mm HRB400E rebar across 24 major markets was 3,283 yuan/ton, a mere increase of 2 yuan/ton from the previous trading day. Specifically, Zhengzhou dropped 10 yuan, Chongqing rose 10 yuan, and most other cities remained stable.
Plates:National average prices for hot-rolled coils and medium-heavy plates remained flat compared to the previous trading day.
Sections:Angle steel, channel steel, and I-beams saw drops of 10-40 yuan in some East and Central China cities, indicating relatively higher pressure on long product demand.
In the futures market, the Rebar main contract rose 6 points to close at 3100 (+0.19%), and the Hot Rolled Coil main contract rose 7 points to close at 3278 (+0.21%). Changes in the futures-spot basis structure reflect that the market’s expectation for long-term cost support is stronger than its confidence in immediate spot demand.
The Game Between Strong Costs and Weak Demand Will Continue
Comprehensively, the current steel market faces a complex situation interwoven with bullish and bearish factors.
Bullish Factors:International energy and raw material prices driven up by geopolitical risks form strong cost support. Meanwhile, the significant month-on-month improvement in domestic real estate sales and clear macro policy support provide a floor for market sentiment.
Bearish Factors:The actual demand recovery is average. Last week, the destocking rate for the five major steel varieties nationwide slowed from 480,000 tons to 270,000 tons, showing clear characteristics of “restocking on demand” downstream without strong speculative or reserve demand. Simultaneously, the average daily output of molten iron has rebounded to near 2 million tons, keeping the supply side relatively rigid, leaving the market in a state of “weak balance.”
Technical analysis suggests that raw materials like iron ore are showing signs of a technical rebound after consecutive declines, driving a slight rise in finished material futures. However, given that the fundamental pattern of “weak supply and weak demand” remains unchanged, the probability of steel prices fluctuating continuously in a single direction is limited. Market capital and sentiment will be the main factors dominating price fluctuations in the short term.
Reprinted from steel.com
