Steel Market:
Since the middle of October, by the policy pressure, the domestic black futures market all the way down, the market confidence is obviously frustrated, coupled with the downstream demand release is not as expected, the domestic steel spot market also showed a high decline in the trend, as of November 8, Tangshan steel billet market price of 4900 yuan, down 430 yuan from the previous month's high; the national three-grade rebar spot average price of 4938 yuan, down 1008 yuan from the previous month's high; the national hot-rolled coil spot average price of 5098 yuan, The national average spot price of cold-rolled coil was 5922 yuan, down 599 yuan from the high point of the previous month; the average spot price of medium and thick plate in the country was 5386 yuan, down 475 yuan from the high point of the previous month.
Lange Reviews:
After experiencing the traditional "Golden Nine Silver Ten" demand season, but showing obvious peak season is not prosperous, the basic logic of the domestic steel market trend is quietly changing, "winter storage" has gradually become the main logic of the domestic steel market, so how will the "winter storage" logic affect the trend of the steel market? The author will analyze from the following aspects.
First, from the perspective of demand, since entering November, the demand for the domestic steel spot market has shown obvious signs of inadequacy, especially the real estate industry has been suppressed by policies more and more obviously, construction and new construction are obviously insufficient, at the same time, the infrastructure industry has been affected by the lack of funds to recover, although in the Ministry of Finance "new special bonds as far as possible before the end of November" requirements, special bond issuance will continue to accelerate, will effectively drive infrastructure and other fields to expand effective investment, But this winter will likely face a cold winter, and the impact of the weather will become more pronounced. For the manufacturing industry, under the constraint of high cost, the overall manufacturing industry will most likely show a weakening trend, but the demand for some industries still has a significant rise, so the demand for industrial steel will appear differentiated, and there will be a general contraction trend.
Second, from the perspective of supply, in the context of policy-based pressure production, the implementation of regional production restrictions in autumn and winter will be more stringent, while the northern ring Beijing region will also be affected by the Winter Olympics, atmospheric safeguard measures will also form a greater restriction on the release of regional output, at the same time, the sharp decline in domestic steel market prices has now approached the production costs of steel mills, from the end of October, the crude steel production of large and medium-sized steel enterprises has dropped significantly, it can be seen that the sharp contraction of profits is forcing steel mills to actively reduce production. Therefore, the contraction of the supply side in the later period may exceed expectations.
In the short term, the domestic steel market is out of the "demand" logic, and gradually into the "winter storage" logic, under the "winter storage" logic, the domestic steel market will face a weak supply and demand situation, domestic steel prices and steel mill production costs will show a clear game situation, steel production costs will become the key to whether "winter storage" can be done. (Lange Steel Research Center Ge Xin)