As we enter 2022, the global economy is facing numerous uncertainties due to recurring COVID-19 outbreaks, Federal Reserve interest rate hikes, and strong global inflation expectations. Under China's "stable growth" policies, the economy is expected to return to normal track, and the steel industry will show relatively stable performance. On February 25, Li Xuri, General Manager of Zhangxuan Hi-tech Longxiang Development Company, was interviewed by China Metallurgy News and introduced the current internal and external environment facing the steel market.Regarding the domestic steel market trend in March, Li Xuri analyzed and forecasted from aspects including macroeconomics, production restrictions, supply and demand, and inventory.From an international perspective, the recent escalation of Russia-Ukraine geopolitical risks can easily cause international market panic and fluctuations in global commodity markets, particularly affecting crude oil and precious metals markets, with the black market at risk of following suit.From a macro policy perspective, on February 18, 12 departments including the National Development and Reform Commission jointly issued the "Notice on Printing and Distributing Policies to Promote Stable Industrial Economic Growth," proposing to ensure stable supply and prices of important raw materials and primary products such as iron ore and coal, further strengthen futures and spot market supervision of bulk commodities, and enhance price monitoring and early warning for bulk commodities. The notice supports enterprises in investing and developing mineral projects that meet resource conditions and ecological environmental protection requirements, such as iron ore and copper mines, and promotes comprehensive utilization of recycled resources including scrap steel, non-ferrous metals scrap, and waste paper to improve the resource guarantee capacity of "urban mines." "Recently, the National Development and Reform Commission and other departments have paid high attention to abnormal fluctuations in iron ore prices and have taken a series of measures to ensure stable supply and prices of iron ore. I believe that under macro-regulation, the raw material market will stabilize in the future, which is beneficial to steel prices maintaining stable operation," said Li Xuri.From an environmental production restriction perspective, Li Xuri explained that in the first quarter of this year, affected by the Beijing Winter Olympics and off-peak production in autumn and winter, China's crude steel output will decrease year-on-year. According to statistics from China Iron and Steel Association, in mid-February, the daily average iron output of key statistical steel enterprises reached 1.6836 million tons, down 2.09% from the previous ten days and 16.69% year-on-year; the daily average crude steel output reached 1.8989 million tons, down 1.28% from the previous ten days and 16.80% year-on-year; the daily average steel product output reached 1.809 million tons, down 0.06% from the previous ten days and 14.70% year-on-year. "After entering March, the holding of the Beijing Winter Paralympics and the National People's Congress will further increase the off-peak production efforts of steel enterprises in the Beijing-Tianjin-Hebei region, and the supply side will continue to show a downward trend," Li Xuri predicted.From the perspective of downstream demand, the increase in infrastructure project commencements will play a certain stimulating role in the market and help improve market trading conditions. Li Xuri believes that market demand in March will be better than February and even better than the same period last year. However, demand release is mainly concentrated in infrastructure projects, while the real estate market remains pessimistic. "The start of infrastructure demand in March is certain, but the intensity remains to be verified," Li Xuri stated. "Therefore, although macro policies continue to release favorable signals, market participants must be vigilant about risks brought by uncertain factors."From an inventory perspective, according to steel association statistics, in mid-February, the social inventory of five major steel varieties in 21 cities nationwide reached 14.19 million tons, increasing by 1.83 million tons month-on-month, a growth rate of 14.8%, with inventory continuing to rise rapidly; it increased by 6.31 million tons compared to initial inventory this year, a growth rate of 80.1%; and decreased by 1.1 million tons compared to the same period last year, a decline of 7.2%.Li Xuri predicts that the uncertainty of international situations combined with unclear domestic demand warming signals means the steel inventory inflection point has not yet appeared, and there is room for adjustment in steel spot prices. In the short term, the steel supply and demand structure is difficult to change significantly. Although the supply side is expected to slowly recover driven by the resumption of short-process steel enterprises, considering that raw material prices are still relatively high and show no signs of downward adjustment in the short term, this will to some extent restrict the recovery of steel production. Additionally, long-process steel enterprises, due to production restriction policies that have not fully loosened, will maintain their current production pace, and future supply release remains to be observed."In summary, in the short term, market fundamentals will maintain a relatively stable state, with limited risk of significant downward movement. As downstream construction sites accelerate commencement in March, demand will see substantial recovery, and the steel market is expected to fluctuate upward in March," Li Xuri stated.