Basis Remains Strong, No Major Decline Yet, Expect Continued Volatility This Week

Market Recap
Over the weekend, the spot market stayed firm as anticipated. The strengthening basis in finished steel suggests that spot prices are unlikely to experience a significant drop in the near term. In the broader futures-spot interplay, no sharp decline is expected unless external conditions shift substantially.

  • Rebar Insights:
    • Last week’s main contract saw a reduction of 286,000 lots, while the new contract gained just 78,000 lots.
    • This indicates large capital is retreating to the sidelines, limiting the potential for major market moves.

Macro Factors

  • The U.S. Dollar Index strengthened last Friday, driven by weaker-than-expected Eurozone PMI data.
  • However, continued dollar strength seems unlikely this week. A weaker dollar could create favorable conditions for commodities.

Strategic Outlook
Our current stance is to “sell on highs.”

  • In the event of short-term price increases, waiting for higher levels before selling is advised.

Stay vigilant and monitor external factors closely for potential shifts!

📌 Daily insights provided by LangZo Steel. For reprints, please credit LangZo Steel.