The current steel market stands at a critical juncture where three major variables intersect: overseas geopolitical conflicts, the domestic policy window period, and the fundamental "weak reality versus strong expectations." The ongoing escalation of the Middle East conflict is driving up energy and shipping costs. The upcoming National Two Sessions are expected to release signals on stable growth and supply-side regulation. Coupled with the gradual onset of the traditional peak demand season ("Golden March and Silver April"), steel prices lack the foundation for a unilateral sharp rise, yet also have limited room for a deep decline. For traders, March represents an operational window to control risks, capture fluctuations, and assess structures, requiring close attention to policy signals, the pace of demand realization, and the evolution of geopolitical risks. Detailed analysis follows:

I. Rising External Disturbances, Strengthening Cost Support

The recent escalation of conflicts in the Middle East has evolved from localized friction into a major event impacting global energy supply chains. The Strait of Hormuz, a critical chokepoint for global oil transportation, if disrupted, would directly push up international oil prices and shipping costs. Rising oil prices will directly increase costs in coking, smelting, and transportation, providing bottom-line support for steel prices. Historical data shows that in the early stages of geopolitical conflict escalation, commodities often exhibit a trend of "strong oil, stable steel." In the mid-term stage, if inflation expectations rise, volatility in the ferrous complex will increase significantly.

However, caution is also needed. Disruptions in Red Sea shipping and rising freight costs will impact China's steel export pace. Coupled with stricter export license management, a significant surge in March export orders is unlikely, with demand focus remaining domestic.

II. Two Sessions Set Supply and Demand Tone, Determining Mid-Term Direction

With the Two Sessions imminent, market attention is highly focused on topics such as stable growth, new quality productive forces, and capacity regulation. Policy expectations will dominate steel market sentiment in March. On the demand side, the meetings are expected to outline work around expanding domestic demand, major projects, equipment upgrades, and urban village renovations, benefiting the recovery of demand for both construction and industrial steel. Furthermore, as the inaugural year of the "15th Five-Year Plan," infrastructure support is likely to strengthen, and manufacturing upgrades will continue, forming policy support on the demand side. On the supply side, the "Stable Growth Work Plan for the Steel Industry (2025-2026)" explicitly calls for strict control over new capacity and output regulation. Coupled with normalized environmental protection inspections and heightened safety production checks, the pace of steel mill production restarts in March is expected to be cautious, making rapid supply increase in volume unlikely. Overall, policy leans positive for steel market sentiment, but actual demand realization will still take time.

III. Fundamentals: Inventory Accumulation, Gradual Demand Recovery

The domestic steel market's fundamentals are characterized by inventory accumulation, slowly recovering demand, ample raw materials, and improving profits, providing resilience to steel prices. As of late February, rebar and other construction material inventories were lower than the same period last year. Low inventories imply that once downstream concentrated restocking occurs, prices could rise easily, offering support to the market. March marks the traditional peak consumption season, with construction site work resumption rates increasing and end-user procurement gradually picking up. However, the real estate sector remains focused on stability with limited rebound potential; infrastructure, manufacturing, and equipment renewal will become the main drivers of demand.

IV. Range-Bound Futures, Seizing Fluctuation Opportunities

Futures prices are caught in a game between policy expectations and actual demand, lacking conditions for a unilateral sharp rise but also without significant fundamental drags for a steep fall. Rebar and HRC are expected to primarily trade in ranges with an upward bias, technically oscillating around moving averages. The operational strategy should focus on going long on pullbacks that stabilize and reducing positions on rallies to resistance levels, with strict stop-losses in place. Simultaneously, one must remain vigilant about significant geopolitical and policy uncertainties,strictly control positions, and guard against gap openings triggered by unexpected news.

V. Comprehensive Outlook and Operational Suggestions

In summary, the March steel market will see a resonance of external disturbances, policy drivers, and fundamental restoration. The Middle East situation determines the cost floor, Two Sessions policies determine the upside potential, and demand realization determines the trend's sustainability. Operationally, it is advisable to maintain a procurement-as-needed approach, selling into strength to avoid excessive inventory buildup. Closely monitor Two Sessions policies and adjust flexibly to capture wave operation opportunities.