Steel prices have limited space to fall

Last week, domestic steel production costs continued to decline, but the decline has slowed. According to the cost model, as of March 21, the cost of conventional billet fell to 3,142 yuan/ton, the cost of tertiary thread fell to 3,573 yuan/ton, the cost of ordinary carbon plate fell to 3,567 yuan, and the cost of high-line fell to 3,499 yuan. RMB/ton, the cost of hot-rolled 3.0 fell to RMB 3,611/ton, and the cost of cold-rolled 1.0 fell to RMB 3,982/ton. The above steel species fell by around RMB 24-25/ton from the previous week, a drop of 0.62%-0.75%, which was significantly narrower than the 1.39%-1.83% decline in the previous week.

From the factors that affect the cost of steel production:

1. Raw material market: Last week, the raw material turnover was not good, steel mills were used with the use, and low inventory kept, and the price continued to decline. As of March 21, the average price of domestic refined iron ore fell by RMB 5/ton, the average price of imported ore fell by RMB 1/ton, and the average price of metallurgical coke dropped by RMB 39/ton, of which domestically produced mines and imported mines. The decline was significantly narrower than the previous week.

2. Marine market: Last week, the sea freight market was driven by the rapid increase in freight rates for sea-going vessels. As of March 21, from week to week, the freight rates from Brazil to China's Capesize increased by US$1.038/ton, and that from Western Australia to China's Capesize increased by US$1.138/ton; the BCI rose by 359 points, and the BPI fell by 1 point. The BSI rose 26 points and the BDI rose 122 points.

Last week, due to the low enthusiasm of merchants to take goods and the recent major steel mills to overhaul and restrict production, the social steel inventory deceleration continues to accelerate, but the demand release remains unsatisfactory. The HSBC manufacturing PMI in March hit an eight-month low, implying that The demand recovery is still weak. This week is at the end of the month. Business fund pressures have been increasing, and the number of dark sellers has tended to increase. With the suppression of low-cost resources, there is very little possibility that steel prices will increase. However, the recent narrowing of the decline in raw materials, the accelerated recovery of the maritime shipping market, the cost decline slowed down, is expected this week, the space for steel prices may be limited, the overall operation of steel prices or the main weak consolidation.