Caixin Futures: The ferrous sector continues to fluctuate at low levels, with coking coal relatively strong amid expectations of supply contraction

⑴ Steel prices remain rangebound at low levels. On the supply side, output continues to decline, while on the demand side, weak momentum persists, leaving little strength for upward price movement. In terms of capital flows, both long and short positions increased in the Rebar October contract among the top 20 positions, with a slightly larger increase in shorts; in the Hot Rolled Coil October contract, both longs and shorts decreased, with a similar degree of reduction. Technically, the Rebar October contract saw a decline with increased positions and a rebound with reduced positions, indicating active bearish sentiment. Watch for support at the 3,065 yuan per ton level below, and resistance near the 40-day moving average above.⑵ From a valuation perspective, losses at steel mills have widened, and spot prices have fallen below the off-peak electricity cost of electric arc furnaces in East China, placing current valuations in a neutral zone. Inventory pressure persists, and the ongoing weak reality continues to constrain the market. There is a need to be alert to the risk of negative feedback if macro policies disappoint expectations.⑶ Iron ore is fluctuating at low levels. Global shipping and port arrivals have risen significantly month-on-month, but the actual impact of supply disruptions remains to be seen. Molten iron production continues to decline, and rigid demand is weakening. The September contract is falling on decreasing positions, testing support at the 20-day moving average; watch for resistance at the 765 yuan per ton level above, and support at the 740 yuan per ton level below. Among the top 20 positions, there has been an increase in longs and a decrease in shorts, showing a slightly bullish bias. Supply disruptions have not fully dissipated, but with terminal demand declining, upward drivers remain weak, and prices are likely to remain rangebound in the short term.⑷ Coking coal remains in a low-level range. Many coal mines in Shanxi remain halted or have reduced output, and supply recovery at production sites is slow. Molten iron production continues to decline. The first round of coke price reductions has begun, and downstream coke and steelmakers are becoming increasingly cautious with their purchasing. Traders are also gradually lowering prices to sell off inventory, causing short-term spot prices to fluctuate weakly. Shanxi Province is about to introduce unprecedentedly strict administrative and criminal measures to eliminate covert production areas and strengthen safety supervision, providing some positive support to market sentiment in the short term; however, downstream weak demand still limits the room for a rebound.⑹ Coke prices are driven weakly. Coal feedstock prices continue to fall, and coking enterprises' profits are seeing slight recovery while overall production remains stable. On the demand side, there is a concentrated increase in blast furnace usage, but with steel mill profits under pressure, there is strong motivation to suppress coke prices, leading to reduced purchasing volumes. The main futures contracts are trading at a significant discount to spot prices, leaving futures valuations at relatively low levels. Steel mill losses continue to widen, strengthening their desire to cut raw material costs. The first round of coke price reductions has started, and in the short term, futures lack momentum for an upward correction. Valuations face downside risk, though the wide basis may limit the extent of the decline.⑺ Silicomanganese remains rangebound at low levels, with fundamentals staying weak and stable. Manganese ore port inventories have declined slightly month-on-month, while demand remains sluggish. Plants are maintaining low operating rates, leading to a continued increase in in-plant stocks and overall weak drivers. Technically, the September contract fell on increased positions, meaning short-term weak fluctuations may persist. In terms of capital flows, both long and short positions rose among the top 20 positions, with shorts increasing slightly more.