Dark clouds enveloped steel prices and rainstorms

Another round of heavy rainfall will invade the south. Along with heavy rain, the steel market is also overshadowed by dark clouds. Steel prices have been falling steadily. The comprehensive index of China's steel prices has dropped to a new low in 20 years. On the 20th, the domestic steel market prices continued to fall by 10~20 yuan compared with the previous day. ** Continued low order, market sentiment has not improved, so the weak spot market for steel remains weak, and all varieties are weak.

According to China Steel's spot network inspection data, as of the 20th, the price of HRB400 (20mm) rebar from 25 major markets nationwide reported at 3,270 yuan/ton, down by 16 yuan/ton from the previous trading day. In the main market, the price of general-purpose 20mm medium plate was reported at 3478 yuan/ton, which was a 4 yuan/ton lower than the previous day.

It is now in late May, but demand growth in May has not changed much compared to April. So far, the real demand has not yet been effectively released, coupled with the suppression of high-capacity, low-margin, and debt-risk issues. Currently, the market is not ideally shipped and the market price is unlikely to increase, and the steel market will be withdrawn by the end of the month. The pressure of funds has severely dampened everyone’s confidence in the market.

The overall downstream demand is weak overall, and procurement is limited. From the perspective of inventory, as of last Friday (May 16th), five major steel grades in domestic key cities (rebar, wire rod, hot rolled, cold rolled, medium plate) ) The total social inventory is 154.219 million tons. Although demand in the second quarter improved compared to the first quarter, everyone's expectations did not dare to increase. After all, some budgetary investments and large investments started in the second quarter, and their role will gradually be released. It is just that the growth rate has dropped, and the country is now striving for steady progress. Therefore, the steel industry has not been able to get timely 'stimulus', and as the summer approaches, the seasonal growth of Chinese steel demand is about to end.

The problems facing steel are still present. Problems such as overcapacity and debt risk will continue to plague the steel market, affecting the confidence of the industry in the future market. Now the real estate market is also turbulent. It has a significant impact on the steel market. Although the government has taken some measures to cope with the decline in real estate, whether or not the real organization can be debatable. The demand for the construction steel market will still be affected.

The situation of oversupply in the steel market remains grim. According to the latest data released by the China Iron and Steel Industry Association in the mid-year report, the average daily output of crude steel in the iron and steel enterprises was 1.84411 million tons in the first half of May, a record high, and an increase of 1.57% from the end of April. Affected by the oversupply of iron and steel production capacity, it is difficult for steel production to fall sharply. It is difficult to reverse the situation of supply oversupply. It is still difficult for steel prices to rebound sharply in the future, and will continue to show low volatility.

The cost is also continuing to be weak; due to the significant increase in imported ore, the imbalance between supply and demand of iron ore is obvious. The oversupply of iron ore is difficult to change, iron ore stocks are high, and low prices have become the norm in the market. In addition, the future of ** ore mines will end in a concentrated manner, the risk of rejection of ** mines will increase sharply, and steel mills will have to iron ore. The preparation of the library is not of high interest. Judging from the current import market, the probability of a break below the $100/tonne cost line in May is increasing. It is expected that iron ore prices will continue to decline in the future, and billet prices will continue to fall, and cost support will weaken.

In the absence of any improvement in the steel market environment, heavy rains in the South have recently severely affected the construction of outdoor construction projects, and a large number of steady growth projects have caused great concern over the release of steel demand. Also bring some pressure on the market, the current inventory is low, the limited sale of resources is still able to support the business mentality will not be too weak; However, weak downstream demand, turnover is sluggish, coupled with continuous decline in the screw period makes the market outlook lack of confidence, short-term Domestic steel prices are still weak.