October Chinese Steel Market Analysis

For the upcoming October, the steel market is still full of uncertainties. Next, the author briefly analyzes the trends of various steel products in October.

Plate: There is a slight upside. Although the macro data released recently is positive, it is still difficult to “warm” the “cold body” of the steel market. From the downturn of the spot market in September, we can see that the impact of the actual downturn in downstream demand is far greater than the positive effect of positive data. In terms of production capacity, it is difficult to ease the situation of persistently high levels, and it is difficult to break the balance between supply and demand. Although the slogans of environmental remediation are endless, there are not many actual actions. Moreover, air pollution control is a huge project that will not happen overnight. Of course, the impact on the steel industry will take time.

In the case of poor market confidence and unsatisfactory plate turnover, most sheet metal manufacturers lowered the ex-factory price or remained flat, reflecting the lack of confidence in the market outlook. However, the macroscopically positive side is still an important "weight" for the plate to reverse "the universe." In addition, the overall stability of the automotive industry in August, the September subsidy policy for new energy vehicles landed, special funds directly allocated to good car prices, supporting facilities will also speed up, bring greater benefits to the auto market, will also increase the demand for sheet. If the macro situation in the later period continues to improve, the situation of tight funding will ease, and the imbalance between supply and demand will be resolved. The plate market may still oscillate slightly upwards.

Taking hot-rolled steel sheet as an example, the slight rebound of spot inventory in the hot rolling market will continue. According to the monitoring data from the China Steel Network, the current three-month declining trend of hot-rolled spot stocks has turned around and turned upwards, which will undoubtedly increase the sentiment of the market to bearish on the trend in the latter period. Moreover, at present, resources in the east and north of China are increasing, and the backlog of inventory in the South China market is relatively high, and the market is difficult to digest. In this light, it is estimated that the pressure of destocking in the latter period of hot rolling is very high. In addition, the turbulent trend of the raw material market will also hinder the market from improving. It is expected that under the influence of a variety of negative factors, it will be difficult for the hot rolling season to occur in October. It is estimated that the weak shock will be the main tone.

Scrap: Slightly improved The macroeconomic stabilization and improvement did not boost the steel market, while crude long-term production increased unabated, and signs of improvement in demand remained unclear, causing the entire steel industry to stagnate. However, due to the post-holiday funds will be eased, the climate is conducive to the construction of the project, it is estimated that the fundamentals of the steel market after the National Day will be improved, and the procurement of scrap will increase, perhaps the post-holidays scrap market will end Fall back up. However, it is expected that the recovery of scrap steel will not be large in the face of major changes in macroeconomics and fundamentals.

Building materials: Prosperous season is not expected, and the non-light season is the main tone of the steel market this year. It can be said that the rising prices in July and August this year consumed the demand for the “Golden September” season in advance. However, under the favorable conditions of policies and the recovery momentum of the manufacturing industry is expected to stimulate demand, the release of downstream demand in October will accelerate, especially in the "Silver 10" season, the real estate industry will have extraordinary performance, which will have Helping to increase developers' enthusiasm for new housing construction and start-ups, and thus increase the demand for building materials, which in turn drove the price of steel to rise.

In addition, in September, the inventory of construction steel in major cities in China is still at a relatively low level, which will help construction steel to stop falling and rise. However, due to not optimistic about the trend of the late steel market, Shagang and other leading steel mills cut the ex-factory price, and Shagang's ex-factory price reduction in the latter part of September has expanded, which will undoubtedly suppress steel prices upward, so even in October steel There may be a rise in the city, but it is estimated that the increase will not be significant under the bad bearish game.

Profiles: Stabilization Although the peak season effect did not appear, the profile demand situation is still considerable. Steel is widely used in industrial and civil buildings and metal structures, ships, vehicles and machinery manufacturing. Among them, cold-formed steel is a kind of economical and efficient steel, which plays a major role in the field of engineering construction. The National Development and Reform Commission and the Ministry of Housing and Urban-Rural Development had proposed earlier this year that during the “Twelfth Five-Year Plan” period, a total of one billion square meters of new green buildings should be completed; by the end of 2015, 20% of newly-built buildings in cities and towns will meet the requirements of green building standards. It can be seen that the demand for profiles in the construction industry in the later period is very considerable. It is expected that the 10 fishmeal profile market will be based on the maintenance of stability.

Pipes: Stable In 2013, “Jin 9 Silver Ten” faced a dilemma of insufficient operating rate, difficulty in ensuring profitability, closing risk at the end of the year, tightening of funds, and long-term prospects. As there is no substantial positive support, the current market conditions continue to slump, the majority of spot resources are upside down, some lack of specification resources quite price reluctant to sell, raw material market confusing trend will also hinder the market from improving. Therefore, even if the financial situation after the holiday market has eased somewhat, it is estimated that the pipe market is unlikely to change significantly, and there is a high possibility of stability.

Analysts of China Steel Network said: “While not worrying about the future, it is better to work harder now. On this road, only by seizing today will it be possible to win tomorrow. Therefore, steel traders do not wait for the market to turn for the better. They do not want to solve the current problem today. What's more, 'tomorrow' is not necessarily a good thing, and perhaps even more sad than today's. In a nutshell, the current overcapacity in steel is an industrial problem that is difficult to eradicate in the short term. In the next month, the steel market may have improved in October. However, it is really a bit overhang to get rid of the weakness completely."