"Golden Nine" has reached the peak season can the market be cashed?

August seems to be not very friendly to the steel industry, due to the multiple impacts of policies, climate and epidemic, steel prices have shown a significant correction, shipments are not as good as before, the off-season market is played out to the fullest. Now, finally ushered in the "Golden Nine" traditional demand peak season, can the steel market pick up, can steel prices rebound?

The steel market did not usher in the "opening red" market in September, and the current price of rebar in the rebar period both fell, but there was a slight increase today. On September 2, the main contract of rebar futures in the previous period rose sharply, closing at 5273 yuan / ton, up 11 yuan / ton, an increase of 0.21%. According to the monitoring data of Lange Steel Cloud Business Platform, on September 2, the average price of tertiary rebar (Φ25mm) in the top ten key cities in China was 5223 yuan / ton, a slight increase of 7 yuan / ton from the previous day.

Wang Siya, a senior analyst at Lange Steel Network, said that the reason why September did not usher in a good start is mainly because the demand start was less than expected and the recently released PMI data was not satisfactory. Although there was a wave of price increases in steel prices in July and August, the actual sales volume was limited, coupled with high costs, high capital pressure, and coincided with the end of the month and the beginning of the month involving capital turnover problems, resulting in the intensification of the rebar futures disk shock, the market bearish atmosphere.

First of all, from the demand side, due to floods, epidemics in many places and seasonal off-season, steel demand in July and August fell sharply. With the arrival of September, the climatic conditions have improved, the domestic epidemic situation has been basically lifted, the accelerated issuance of local special bonds has been superimposed, the start of major engineering projects in various places has improved significantly, and the demand for construction steel will show a significant improvement.

However, the PMI of domestic manufacturing has declined to a certain extent. China's Manufacturing Purchasing Managers' Index (PMI), surveyed by the Service Industry Survey Center of the National Bureau of Statistics and the China Federation of Logistics and Purchasing, was 50.1 percent in August, down 0.3 percentage points from the previous month; this is the fifth consecutive month of decline, reflecting a weakening of manufacturing expansion. Among them, the new orders index fell below the boom-bust line for the first time since February 2020, and the new export orders index continued to fall in the contraction range, hitting a new low since June 2020. This will have a certain impact on the demand for plates, and it may be difficult to grow in the second half of the year.

In terms of output, with the second round of the fourth batch of central ecological and environmental protection inspectors fully launched, the nationwide production restriction continued. At the same time, a number of steel mills across the country have successively issued a plan for suspension of production and maintenance in September, and some provinces and cities have strengthened production restrictions, such as Guangxi to strengthen the dual control of energy consumption, and steel enterprises will reduce production by 20% in September. This will constrain the release of steel production in September.

In terms of inventory, with the gradual release of demand, steel social inventory or will continue to decline. Lange Steel Cloud Business Platform monitoring data show that on August 27, the social inventory of steel in 29 key cities across the country was 13.142 million tons, a decrease of 108,000 tons from last week, a decrease of 0.82%, an acceleration of 0.56 percentage points over the previous week; and there has been a cumulative decline of 463,000 tons, a decrease of 3.4%.

In terms of steel mill inventories, there is currently a slight upward trend. According to the statistics of the China Steel Association, in mid-August, the steel inventory of key enterprises was 14.934 million tons, an increase of 16,000 tons over mid-July. Lange Steel Network statistics show that on August 27, the inventory of construction steel mills in major regions of the country was 6.300 million tons, an increase of 200,000 tons from the end of the previous month, up 3.3% month-on-month. However, with the arrival of the peak season of "Golden Nine" steel demand, steel demand will be gradually released, driving the overall decline of social libraries and factory libraries.

In terms of monetary policy, Wang Guoqing, director of lange Steel Research Center, said that from the current point of view, monetary policy is in a stable and loose, and it is likely to reduce the RRR again in the later stage, increase credit to support the real economy, and maintain reasonable and abundant domestic liquidity, which is expected to form a practical support for the operation of the downstream steel industry.

For the later trend, Wang Guoqing said that under the interweaving of multiple factors, the current market optimism has heated up, and it is expected that the domestic steel market will show a shock and strengthening operation trend in September. (Lange Steel Press Center Peng Cuiting)