The steel ore market on November 2 can be described as "no eggs under the nest", and the finished timber varieties that once fluctuated less - threads and hot coils have touched a stop during the day, not to mention iron ore. By the close of 3 p.m., the main contracts of thread, hot coil and ore closed down 8%, 6.6% and 9.95% respectively. The author believes that in the context of the new year-on-year low in steel demand, with the sharp decline in the market today, the overall bearish trend of the black plate has been determined.
The decline in steel demand is the main reason for the sharp decline in the disk. In the case of insufficient overall demand, the inventory of rebar production enterprises has a rare phenomenon of accumulation in the traditional peak season in October. Although on the whole, the inventory of various varieties of steel is still declining, but the rate of decline has slowed down significantly.
Chart 1: Rebar production enterprises inventory peak season accumulation (unit: 10,000 tons)
Behind the phenomenon of finished timber is a significant decline in the overall demand boom. For example, on the demand side of rebar, due to the exposure of individual large real estate enterprises since September, the risk appetite of financial institutions for the real estate industry has decreased significantly, and real estate enterprises themselves have adopted more conservative strategies, and some leading indicators have declined year-on-year and the growth rate has turned negative. From January to September, the statistics bureau announced that the area of new housing starts 152944 million square meters, down 4.5%.
Among them, the area of new residential construction 113374 million square meters, down 3.3%. Leading indicators: Real estate development investment in September fell by 3.5% year-on-year, the first time since March 2020 to turn negative, the decline in land acquisition area is more obvious, from January to September accumulated to 137.3 million square meters, September single month purchase area of 29.97 million square meters, down 2.2% year-on-year.
Chart 2: Land acquisition area (in 10,000 square meters) declines
At the same time, the demand for excavators, the infrastructure barometer, has continued to decline, and the decline is still expanding. Since the peak of 79,000 units of excavators in March this year, month-by-month sales were 41,100 units, 22,000 units, 17,000 units, 12,000 units, and 12,300 units, respectively. Domestic sales of excavators in September were 13,900 units, down 38.3% year-on-year.
The suppression of the demand side of the ore is obvious, can we "salted fish turn over" under the "production restriction policy"? " has a detailed description.
Overall, due to the multiple policies suppressed by steel mill demand, the winter coincides with the traditional off-season, and on the eve of the Winter Olympics, it is difficult to expect steel mills to resume production. Although there are currently certain policy expectations, such as the central bank's third quarter financial statistics press conference on October 15, which continues to emphasize the "two maintenance", which is the third time in the past month that the central bank has mentioned the "real estate" industry in an important financial conference; and recently the relevant departments have interviewed real estate companies that issue US dollar bonds. However, the "support" policy still has a long time from the implementation of the decision to the entry into force. On the whole, the author is bearish black, the current market pessimism is strong, do more to wait for the complete release of emotions.
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