After another round of gains, domestic steel prices have seen some correction in both spot and futures markets recently. Although market trading is currently weak, industry insiders remain relatively optimistic about the later trend of steel prices, given high raw material costs and low steel inventories.

　　According to the trend chart of the steel composite index, since early July, domestic steel prices have seen their strongest rebound since February this year, with only a brief correction in late July and early August. Recently, after another round of rapid gains, steel prices have weakened again starting this week (i.e., August 19). As of August 21, the steel composite index stood at 133.48 points, a slight correction of 0.11 points from the rebound high and up 7.15 points from the low at the end of June.

　　According to market feedback, extreme high temperatures have eased slightly, but some domestic regions have been hit by typhoons, affecting trading in some markets. At the same time, end-user procurement has also decreased, further leading to light trading and thus affecting steel prices.

　　Regarding the current correction in steel prices, an analyst from "Mysteel" said that steel prices rose too fast earlier, laying a solid bottom for continued strength later, and there is currently a need for some consolidation.

　　However, rebar futures prices, which can reflect market expectations more quickly, began adjusting first in the middle of last week. Data shows that as of August 21, the rebar futures 1401 contract once fell to 3,786 yuan/ton, down 62 yuan/ton from last week's high.

　　Liu Yuan, manager of the Commodity Futures Department of the "Mysteel" Research Center, said that in addition to weak spot prices, poor financial conditions and expectations of the U.S. scaling back QE are all unfavorable to futures prices.

　　It is worth noting that while both spot and futures prices corrected, domestic steel mills generally raised ex-factory prices slightly. It is learned that on August 21, Shagang raised prices for rebar, wire rod coils and high-speed wire for late August by 20 yuan/ton; on the same day, Yonggang raised rebar prices by 20 yuan/ton while keeping high-speed wire and wire rod coil prices unchanged.

　　Regarding the steel mills' ex-factory price increases, many traders defined them as "catch-up gains," believing that this move by the mills can slow the pace of steel price declines in the short term, but also said that it cannot stop the downward momentum of steel prices.

　　At the same time, some traders believe that amid the recent slight price correction, the mills' move can be seen as stabilizing current market prices.

　　As for the later trend of steel prices, Liu Yuan believes there is still some room for rebound. The above-mentioned analyst also holds an optimistic view.

　　It is learned that current cost prices provide good support for steel prices. In addition to iron ore prices hovering around $140/ton, coke prices have also risen. On August 20, coke in Tangshan, one of the national benchmarks for coke, ushered in a new round of price increases, with some coking enterprises raising ex-factory prices for quasi-first-grade metallurgical coke by another 30 yuan/ton.

　　In addition, the analyst emphasized that current low inventories are strong support for the market. Data shows that as of August 16, social inventories of the five major steel products (rebar, wire rod, hot-rolled, cold-rolled and medium-heavy plate) in major domestic cities stood at 14.8378 million tons, declining for 22 consecutive weeks. Meanwhile, at the end of early August, steel inventories of key steel enterprises tracked by the China Iron and Steel Association stood at 12.16 million tons, falling for two consecutive ten-day periods.

　　According to her introduction, in the past, if traders expected prices to rise, they would start stocking up early. This year, however, this phenomenon is not obvious. She analyzed that this may be due to limited funds among traders on the one hand, or fear of "being hurt again" on the other.

　　Therefore, she is relatively optimistic about the later trend of steel prices, believing that although steel prices continue to adjust, the overall trend remains upward.