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• Improved macroeconomic expectations: The Federal Reserve has sent a clear signal of interest rate cuts, and the sentiment in the commodity market has warmed up. This not only boosts the domestic market sentiment but also enhances expectations for domestic policy space. With improved macroeconomic expectations, investors and enterprises have increased confidence in future economic development, and thus increase their investment in various assets, including the procurement and reserve of steel, driving up steel prices.
• Improved demand expectations: Although the negative feedback is still in operation and some steel mills continue to reduce production, there is an expectation of a peak season of “Golden September and Silver October”, and steel demand may gradually improve. For example, some projects in the construction industry may stock up in advance before the peak season, and the manufacturing industry may also increase production due to the arrival of the peak season, thereby increasing the demand for steel and driving up prices.
• Increased willingness of steel mills to support prices: According to data from the China Iron and Steel Association, in mid-August, the daily crude steel output of key statistical steel enterprises decreased slightly on a month-on-month basis, while enterprise inventories increased during the same period, indicating a decline in the production enthusiasm of steel enterprises. In this case, steel mills have an increased willingness to support prices in order to maintain a certain profit level.
• Driven by the futures market: On the morning of August 26, futures rebar fluctuated at a high level. The rise in the futures market brought expectations of price increases to the spot market. In the afternoon, the futures market rose rapidly, further driving the spot market transactions to be booming. The actual transaction price moved closer to a high level. The futures and spot markets interacted with each other and jointly promoted the rise in steel prices.
• Supported by raw material costs: Although the raw material prices on that day are not mentioned, based on past experience, the production of steel is inseparable from raw materials such as iron ore and coke. If the prices of raw materials remain stable or rise, they will support steel prices to a certain extent.
• Driven by speculative funds: Based on their judgments of the market, some traders may think that steel prices will continue to rise in the future, so they engage in speculative behavior and buy a large amount of steel spot in the market, reducing the circulation of steel in the market and artificially creating a situation of tight supply, prompting prices to rise.