In May, steel market prices showed an upward trend, aligning with typical peak season patterns. This increase was driven by bullish policies, rising raw material prices, improved market sentiment, and stable demand. However, the overall demand was lower than in April, resulting in a narrower price increase.

For June, steel prices are expected to fluctuate at a high level initially, then be impacted due to slow actual terminal demand despite improved market expectations from policy boosts. Raw material prices for iron ore and coke are likely to increase in the short term, providing some support for steel prices.

China aims to initiate construction on all projects funded by additional government bonds by the end of June. So far, 11,000 of 15,000 projects have started, with a 70% operation rate. This, along with policies promoting equipment updates and trade-ins for durable goods, suggests potential improvement in terminal demand.

Market and corporate inventories are decreasing, indicating an improving supply and demand environment. However, June is typically an off-season for demand due to hot and rainy weather. Market sentiment remains cautious. Despite positive policy boosts, low actual demand continues to create a wait-and-see approach among merchants.