Steel demand and prices will rise from October to November

LONGi news

Recently, at the "14th Five-Year" Central China Construction Steel Industry Development Summit Forum held in Changsha, Hunan, Ma Li, Chief Analyst of Lange Steel Network, delivered a speech with the theme "Analysis of the Market Trend of Construction Steel Structures in the Fourth Quarter of 2021" , He said that steel prices will rise significantly during the peak demand season from October to November.

Ma Li reviewed the price trends of steel products such as rebar, hot-rolled coils, medium and heavy plates, H-beams, and color-coated plates in the first three quarters. He said that the price of rebar has risen sharply in the first half of the year, especially the national average price of rebar in May reached 6,200 yuan, an increase of more than 1,800 yuan from the end of last year; Steel prices rebounded to a certain extent.

In terms of output, Ma Li said that steel output increased sharply in the first half of this year. However, as the national steel industry gradually reduced production, the output declined rapidly in July and August, and crude steel output may continue to remain low in the later period. From January to August, crude steel output was 733.02 million tons, compared with 696.1 million tons in the same period last year, 36.9 million tons higher than last year. According to calculations that the crude steel output for the whole year of this year did not increase compared with the same period last year, September-December will produce 9.23 million tons less than the same period in 2020, which will have a great impact on the entire market in the later period.

On the demand side, according to the latest data from the Bureau of Statistics, from January to August, although the national fixed asset investment, infrastructure investment, and national real estate development investment have increased in two years on average, the real estate construction area, real estate sales, and land purchase area The growth rate continued to deteriorate. Ma Li said that although the real estate industry still has demand for work in the short term, the long-term prospects are worrying, and the overall demand for construction steel shows a seasonal decline.

It is worth noting that the domestic monetary policy is expected to be relaxed while the issuance of local government bonds accelerates to drive infrastructure demand. Ma Li said that in the first eight months of this year, the issuance of new local government bonds completed nearly 60% of the annual quota, of which the scale of issuance in August hit a new high in the year. The issuance of bonds in July and August exceeded 500 billion yuan, and it may exceed 700 billion yuan in September, and another 1 trillion yuan was issued in the fourth quarter, supporting infrastructure investment.

In terms of inventory, Ma Li said that the current social stock of steel is lower than last year, but higher than the previous three years. Since the beginning of August this year, the national steel inventory has continued to decline, and the rate of decline is better than the same period in the past three years of history. The overall inventory of steel mills is relatively high. In late August, the steel inventory of China Steel Association member companies was 13.43 million tons, which was 1 million tons higher than the same period last year and 1.2-1.8 million tons higher than 2017-2019.

Ma Li said that the support of raw materials and fuels to steel prices has weakened in the short term. Due to the restricted production policy, the price of ore has dropped significantly. The current port spot spot is 690 yuan, down 970 from the highest point; the current index is 107 US dollars, down more than 120 US dollars from the highest point. However, affected by the mismatch of supply and demand, coal resources continue to be tight, stimulating the price of coke to continue to rise, and the market price has exceeded 4160 yuan in the recent ten rounds. In terms of scrap steel, the current overall arrival volume is limited, while downstream demand is good, and the overall price is running at a high level.

Regarding the later trend, Ma Li believes that under the continuous reduction in output, the supply of steel resources may be tight from October to November, so steel prices will fluctuate upward. However, under the influence of factors such as high prices, high profits, low demand, winter reserves, unclear demand expectations and other factors, steel prices may plummet around December.