Can the steel market rebound last?

At present, the main reason for the rebound of the domestic steel market is the news that the output is reduced again from various places, but we must also see what is the essential reason behind the inducement? The author will analyze from the following three aspects.

First, from the perspective of the supply side, domestic steel production enterprises have significantly increased their production reduction and maintenance under the condition of low profits or losses. The large and medium-sized steel companies’ crude steel production in late June has declined significantly, which is a good demonstration of the current supply-side performance. status. At the same time, as various provinces and cities continued to report that they would actually reduce steel production in the second half of the year, the black futures market took the lead in rising, and then the spot market began to follow the rise. At the same time, because the steel market is in the traditional off-season of demand, steel The factory also raised the ex-factory price to stabilize the confidence of the market. But in essence, the reason is that after the price of finished products has fallen below the steel mill’s cost line, steel prices themselves need to bottom out.

Secondly, from the demand side, due to the restrictions of the July 1st activity in the early stage, the normal market demand in some northern provinces was suppressed, and the market demand broke out with a small peak. According to statistics from Lange, the daily transaction volume of the Beijing building materials market, the daily shipment volume of the Tangshan section steel plant and the daily order volume of the northern plate steel plant have maintained good market volume, which makes the spot market The pull-up was effectively supported by market transactions. However, from an essential point of view, the steel market is still in the off-season of demand, and whether the small peak of demand can be sustained should be the focus of businessmen’s attention.

Thirdly, from a policy perspective, the National Standing Committee held on July 7 decided that in view of the impact of rising commodity prices on the production and operation of enterprises, it is necessary to maintain the stability and strengthen the monetary policy on the basis of not engaging in flood irrigation. Effectiveness, timely use of monetary policy tools such as RRR cuts to further strengthen financial support for the real economy, especially small, medium and micro enterprises, and promote a steady and moderate reduction in comprehensive financing costs. It is generally analyzed by the market that the State Council has issued a signal of timely RRR cut, indicating that short-term market funds will be slightly loosened.

In the short term, the domestic steel market will maintain a small-step increase under the combined influence of expected RRR cuts, high transaction volume, steel mills’ prices, and cost support. However, we should also see that the supply and demand of the domestic steel market in the off-season with traditional demand is weak. Essentially, you need to pay attention to market transactions at any time

Post time: Jul-09-2021