In terms of front-line resources, the current market quotation for Φ16-25mm second-grade big screws from Shagang is 4280 yuan/ton, Yonggang's same specification is quoted at 4230 yuan/ton, and the mainstream price for third-grade big screws from Shagang is 4400 yuan/ton. For second-line resources, currently 2672 produced Φ18-22mm second-grade big screws are quoted at 4150 yuan/ton, Ma Changjiang Φ16mm second-grade big screws are quoted at 4180 yuan/ton. In terms of coil bars, Yonggang Φ8mm coil bar is quoted at 4300 yuan/ton. For wire rods, Magang high line is quoted at 4300 yuan/ton. All the above prices remained stable as of yesterday's close. Yesterday, the local market saw very poor trading, with some merchants even failing to sell a single ton of goods. Due to seasonal reasons, trade plans for this month have been completed poorly, leading to a weakening of market sentiment and increasing inventory pressure on merchants. The author predicts that local construction steel prices may fall weakly during the session.
I. Analysis of the continuous decline in domestic major steel varieties prices in October
Under the supply-demand contradiction of weak demand and increased capacity, the prices of major steel varieties in the domestic market continued to fall across the board in October, especially the price drop of plate products not seen for many years. On the 21st, the China Iron and Steel Association convened 50 steel enterprises nationwide to jointly study stabilizing the steel market, and by the 24th, the national steel market gradually stabilized. However, with the cooling weather, demand will gradually shrink, some dealers have little hope for the future market, there are cases of urgent selling, causing a slight price decline.
The continuous decline in steel prices is due to: (i) the continued manifestation of macro-control effects, weak demand for steel from downstream industries such as construction, automobiles, and machinery manufacturing; (ii) continued significant growth in domestic steel output, exacerbating the oversupply situation; (iii) panic in market sentiment, serious blockages in market circulation, and the game between dealers and steel mills leading to accelerated price declines.
II. Analysis of factors affecting the rise and fall of the domestic steel market
Recently, the inventories of downstream end-users and small and medium-sized accounts have been at relatively low levels. Once the market procurement mentality reverses, the market situation will inevitably change. Therefore, the key to the future market trend mainly depends on changes in market sentiment and steel mill sales policies.
Positive news:
(i) Current market resources are not abundant, traders basically have no spot resources. There have even been instances of supply shortages and stockouts in the market, which will provide strong support for the stabilization of the market later.
(ii) Steel mills have taken measures to curb traders' continued low-price sales. It is reported that some steel mills are monitoring the sales prices of trading companies that act as agents for their plates to prevent traders from dumping at low prices.
(iii) The China Iron and Steel Association has coordinated with steel mills to jointly "save the market": On the 21st, the China Iron and Steel Association convened 50 steel enterprises nationwide to jointly study stabilizing the steel market and proposed a series of measures, which will have a positive promoting effect on the stabilization of steel market prices in the future.
(iv) A significant rebound in international steel market prices provides some support to the domestic market. Due to production limits implemented by European and American steel enterprises, the high inventory of steel earlier has been digested. Since September this year, international steel prices have stabilized and rebounded. Especially in North America, market price trends are strong. Now, the international market's plate prices are generally higher than those in the domestic market, which is conducive to the export of domestic steel products and increases import difficulties, thus reducing domestic market pressure to some extent.
Negative news:
(i) The pressure of inventory is actually present. Although market prices have fallen significantly, the social inventory of the steel market has always been within a relatively reasonable range, fluctuating up and down. Additionally, the factory inventory of steel mills is relatively large, creating potential pressure on price stability and recovery.
(ii) Steel mills' production is unlikely to decrease in the short term. Despite the sharp drop in prices, due to steel mills' pursuit of production and scale, larger state-owned steel enterprises are less likely to reduce output. They all expect the other party to cut production and look forward to the recovery of market prices. Even if private enterprises temporarily lower production now, once prices recover, resources will quickly replenish, obstructing price increases.
Based on the above analysis, the pressure on market prices to rise still exists. Under conditions of tight funds and general pessimism about the market, the possibility of price recovery is almost non-existent. For steel mills, it is necessary to handle the following issues well: first, continue to strengthen cooperation with users, operate rationally, quickly restore user confidence, establish a real community of interests, and prevent its disintegration; second, pay attention to the safety of the capital chain and prevent the breakage of the capital chain, which would result in more serious consequences; third, adjust production structure and marketing strategies to adapt to new market changes. For intermediaries, actively cooperate with steel mills, do not speculate or disrupt the market artificially, jointly maintain the market, and reverse the passive market situation. This will alleviate the pressure on steel market prices and enable market prices to return to reasonable levels sooner.
Link to the article: Hongxing Materials by: http://www.hxwz.cn/