Steel prices soared rarely, terminal demand to be followed up
Release time：
2023-08-04
From February 26 to March 4, domestic steel prices rose comprehensively and sharply. The construction steel index Xiben-steel index closed at 2130 yuan/ton on Friday, an increase of 50 yuan/ton from last Friday.
From February 26 to March 4, domestic steel prices rose comprehensively and sharply. The construction steel index Xiben-steel index closed at 2130 yuan/ton on Friday, an increase of 50 yuan/ton from last Friday.
In the night trading stage last Friday, due to factors such as positive policy expectations for the two sessions, the decline in the US dollar, and production restrictions at the Tangshan World Horticultural Exhibition, commodity prices rose sharply across the board, and rebar and iron ore futures rose by their daily limits. On Saturday and Sunday, Tangshan steel billet prices soared by 240 yuan/ton, and profiles and strip steel prices generally rose by more than 200 yuan/ton, and the market entered a stage of irrational and crazy rise.
After entering March, as the temperature rose, the construction sites started one after another, and the market transactions were relatively active. The middlemen also actively replenished the inventory when the market outlook was bullish, and the overall inventory continued to rise slightly. As of last Friday, the total inventory of construction steel products on the Shanghai Stock Exchange was 512,500 tons, an increase of 5,000 tons over the end of last week.
Looking at the national market, judging from the total inventory of the five major varieties of wire rod, rebar, hot-rolled coil, cold-rolled coil, and medium-heavy plate, last week, the total national comprehensive inventory was 12.723 million tons, an increase of 50,000 tons. The increase was 0.39%. Overall, the national steel inventory rose slightly last week, while rebar and hot-rolled coil inventories continued to increase, while wire rod, cold-rolled coil, and plate inventories declined. The current inventory level has decreased by 3.403 million tons compared with the same period last year, a sharp drop of 21.1% year-on-year.
Qiu Yuecheng, a senior analyst of Nishimoto Shinkansen, believes that as the market enters the traditional peak consumption season, the national steel inventory is expected to turn into a comprehensive decline channel starting this week. At present, both market inventory and steel mill inventory are significantly lower than the same period last year, and low inventory provides favorable conditions for rising steel prices.
On the demand side, "maintaining the economic operation within a reasonable range" is the first of the eight major tasks in 2016, which shows that stable growth is still the focus of macro policies. Among them, the GDP growth target is set in the range of 6.5%-7%, and the CPI growth is about 3%. Broad money M2 grew by around 13%. This year, it is planned to arrange a fiscal deficit of 2.18 trillion yuan, an increase of 560 billion yuan over last year, and the deficit rate will increase to 3%, which will hit a record high. This year, more than 800 billion yuan will be invested in railways, 1.65 trillion yuan will be invested in roads, 20 major water conservancy projects will be started, and the investment in the central budget will increase to 500 billion yuan. The supply side pointed out that this year, we will focus on reducing production capacity in difficult industries such as steel and coal, insist on market forces, enterprise entities, local organizations, and central support, and use economic, legal, technological, environmental protection, quality, and safety measures to strictly control new production capacity , resolutely eliminate backward production capacity, and orderly exit excess production capacity. Take measures such as mergers and reorganizations, debt restructuring, or bankruptcy liquidation to actively and steadily dispose of "zombie companies." Improve financial and financial support policies, and the central government has arranged 100 billion yuan in special rewards and subsidies, which will be mainly used for the diversion and resettlement of employees.
In terms of the market, driven by a series of positive factors such as the release of production restriction measures for the Tangshan World Horticultural Expo, the Chinese government will increase the leverage, and the decline in the US dollar, the prices of bulk commodities rose across the board during night trading on March 4. Rebar, iron ore The black series futures represented by Shi Shi are even more daily limit. On March 5-6, the price of Tangshan steel billet soared by 240 yuan/ton, and in the early trading of March 7, the price of Tangshan steel billet rose again by 80 yuan/ton. New highs, market confidence is at an all-time high. The skyrocketing prices of futures and steel billets have directly stimulated the spot steel market. On March 7, the spot prices in many markets rose by more than 200 yuan/ton in early trading, showing a rare skyrocketing market.
It is worth noting that when the terminal demand has just improved and the market inventory is still in the rising stage, the steel price has risen so sharply in the short term, which is more the result of the stimulus of policy expectations on sentiment and lacks market reality. The support of demand and the persistence of prices in the later stage remain to be seen.
Policy expectations are good for both steel supply and demand, futures and steel billet prices have skyrocketed, market sentiment is high, and a sharp rise in short-term spot steel prices is inevitable. However, the current rise in steel prices is more driven by emotions and lacks the support of terminal demand. If the later demand cannot be followed up in time, steel prices will definitely face the risk of a sharp drop after a sharp rise.
