In the past few days, the steel market "ignited a fire", the futures rebar price broke the 4000 yuan/ton mark, the black series rose one after another, and the spot price also followed up. The steel market swept away from the previous downturn, from a divergence in the future to a resonant rise in the future.

On the one hand, futures rebar contract swaps have ended. Driven by the rising prices of raw materials and fuels such as iron ore and coke, the market's bullish sentiment has grown, which has driven futures prices to rebound. In particular, hot-rolled futures continued to rise under the stimulus of many positives, refreshing the price high since the beginning of this year.

On the other hand, rebar spot prices rebounded slightly. Recently, environmental protection and production restrictions in many places have become stricter, regional market resources have been suppressed to some extent, market pessimism has been restored, spot prices have completed a phased bottoming ahead of schedule and have come out of a rebound trend, coupled with iron Ore and coke with multiple rounds of price increases have continuously raised the steel cost platform, which to a certain extent blocked the room for steel prices to fall.

Based on this, the steel market is showing a resonant rise in futures.

Recently, Baosteel announced the ex-factory price of steel products in January 2021. Among them, the price of carbon steel thick plate was raised by 300 yuan/ton, and the price of hot-rolled coil was raised by 400 yuan/ton. This indirectly reflects that steel mills are optimistic about the market outlook. However, in my opinion, the stability of steel prices rising in the off-season is not strong. This is because there is not enough demand to support the current rise in spot prices, and the momentum for continued rise in steel prices is limited. According to the author's understanding, although the steel market continues its upward trend, the actual effective transaction volume in the market has been greatly reduced, the transactions of high-priced resources have been significantly blocked, and downstream users have decreased their purchasing enthusiasm because of the rapid increase in prices. This will have a certain negative impact on the market outlook.

Overall, steel prices do not have the conditions for a sustained rise in the off-season market demand release slowed down. The short-term strong rise does not mean that the road to rebound is smooth sailing. On the contrary, the risks of rising and falling futures prices are increasing, and the continued growth momentum of the spot market is also insufficient. The author recommends that market participants should be alert to the risk of rapid decline in steel prices, and should not chase the rise excessively. It is the best choice to settle for safety.