Industry News

Sep 22,2023  Industry News.

On the raw material side: Safety accidents occurred at two coal mines in Shanxi and they were ordered to suspend production for rectification. Prices rise due to reduced coal production, and rising costs lead to rising steel prices

Policies: This week, favorable policies have appeared frequently on the macro front, but there are some shortcomings on the micro front, mainly reflected in:

1. Financial data came out in August, and both credit and social financing scale increased;

2. Monetary policy will continue to be loose, and a second reserve requirement ratio cut will be launched during the year;

3. PPI(Producer Price Index) continued to decline year-on-year, but the month-on-month decline narrowed;

4. The relationship between supply and demand has improved, and the consumer market has recovered;

5. The growth rate of fixed asset investment is slow and the investment in real estate development has negative growth;

6. Some infrastructure construction maintains strength, and the growth rate of railway fixed investment picks up;

7. Demand has not decreased during the off-season, and automobile production and sales have both rebounded.

8. The effect of local stimulus is not good, and housing prices in all tier cities have dropped month-on-month.

Overall, although the policies continue to release benefits, the superimposed effect has not been apparent, and personal "sense of gain" is not strong, indicating that the endogenous driving force for economic recovery is still insufficient.

Supply: From an industry perspective, the supply situation is relatively subtle: on the one hand, according to data from the National Bureau of Statistics, the average daily output of crude steel and pig iron declined month-on-month in August. Demand in metal-related industries improved in August, and ferrous metal smelting and rolling Prices in the processing industry rebounded slightly, indicating that the steel industry is operating warmly again. On the other hand, according to data from the China Iron and Steel Association, the average daily crude steel output of key steel companies rebounded month-on-month in early September, and corporate inventories also increased during the same period, indicating that after entering September, the power of steel companies to reduce production has weakened again, and the speed of inventory reduction has simultaneously slowed down.

Demand side: The demand side is average. Next, terminal demand is expected to fluctuate slightly. Although the supply of construction steel is constrained by costs and more molten iron flows to other steel varieties, if crude steel production continues to rebound, it will also put pressure on the construction steel market

Futures are repetitive, spot prices are rising and falling, and they change frequently with small changes. This is the main feature of this week's market. It can be seen that the current market situation is in the "repair" stage: rising and falling, with a limited range.

The current market situation is: inventories continue to decline, demand rebounds slightly, and prices fluctuate slightly. The current positive factors are: strong raw materials and strong steel mill prices. The main negative factors are: lack of confidence and weak speculation. The change in steel prices this week is mainly caused by the disturbance of the futures market. There is no substantial change in actual supply and demand. It is expected that the market will still fluctuate in a range next week.

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