Steel Market Prices are Weak and Oscillating

　　Data show that as of Feb. 20, prices of all varieties across the country have declined to varying degrees.

　　Construction steel was hit by the weakness of raw materials, the spot end of the stop-and-go operation was obvious, and the price for volume led to a significant downward movement in market prices. Most regions in the thread side fell by 110-210 CNY/ton, with the national weekly average price down 110 CNY/ton, and wire rod prices fell by the same rate.

　　The average price of 3.0mm hot-rolled coil in 24 major markets nationwide was 5,061 CNY/ton, down 119 CNY/ton compared with last week; the average price of 4.75mm hot-rolled coil was 5,007 CNY/ton, down 118 CNY/ton compared with last week.

　　The average price of 1.0mm cold rolled coil was RMB 5,566/mt this week, down RMB 54/mt from last week. Influenced by the falling prices of raw materials such as iron ore, billet prices showed a synchronous fall, and the prices of profile market were mainly retraced, with the price of profiles falling in the range of 43-66 CNY/ton last week.

　　In the general down trend, seamless pipe prices rose by 50-100 CNY/ton to become "a unique show", as of February 18, the national 27 major cities 108 * 4.5mm seamless pipe average price of 6,029 CNY/ton, up 19 CNY/ton compared to last week.

　　The current steel market is still in a relatively weak state of supply and demand, with increased consumption this week, and more than half of the country's construction sites have resumed work, demand is expected to open next week.

　　21 February, GTC Group Jidong International Trade Strategy R & D Department Zhang Lin said in an interview with the 21st Century Business Herald: "Demand is like opening a blind box, the resumption of work and production phase of demand has not yet begun to pass upward. The favorable policy on infrastructure construction is also yet to be realized. If the latter can be paid off, then the impact may be able to continue throughout the first half of the year."

　　Volatility traceable to the source

　　Currently, the situation of low supply and low inventory still exists.

　　Inventory data released by the China Iron and Steel Industry Association shows that the first half of February, 21 cities, 5 major varieties of steel social inventory of 12.36 million tons, an increase of 2.73 million tons, an increase of 28.3%, the increase in steel inventory than the previous period has expanded, compared with the beginning of the year increased by 4.48 million tons, an increase of 56.9%; compared with the same period last year increased by 650,000 tons, an increase of 5.6%.

　　Some industry insiders pointed out that the first half of February is due to the Spring Festival holiday factors lead to a large increase in steel mill inventory and social inventory, but in the case of construction steel, for example, review 2022 Spring Festival, by the "carbon peak carbon neutral" and "heating season production restrictions" and other policies the domestic construction steel production overall in the same period of the year at a low level.

      In the overall supply contraction, this year before the Spring Festival construction steel inventory rebound is far less than the same period in 2020-2021.

　　Not long ago, the Ministry of Industry and other departments released the "Fourteenth Five-Year" raw materials industry development plan: by 2025, crude steel, cement and other key raw materials bulk product capacity only reduce not increase, capacity utilization rate remains at a reasonable level, the steel industry ton of steel integrated energy consumption by 2%. The establishment of a restraint mechanism to curb the expansion of excess capacity, peak production, strict control of fuel coal consumption and other initiatives are higher requirements for the supply side.

　　As for the demand side, after the festival, many places to focus on construction, coupled with the relevant ministries and commissions to voice "moderately ahead of the infrastructure investment" on the market mentality to play a certain drive. In Zhang Lin's view, infrastructure steel can only generate short-term demand, while real estate is the bulk of steel, infrastructure steel increment or not enough to fill the reduction in real estate steel.

In fact, since late November last year, real estate credit has been relaxed, the country's new round of steady growth signals continue to release, the market has stabilized rebound; but the off-season demand is weak, contraction, the market is in the strong expectations, weak reality game, the overall bottom of the narrow range of oscillation running trend.

　　It is worth noting that, according to the habit of previous years, businessmen will buy steel products at low prices in winter, and then sell these products in the New Year when consumption resumes. A steel trader bluntly said: "This year, we are generally not high enthusiasm for hoarding, most of them suspend hoarding plans, choose to wait and see. On the one hand, due to the current market price is high. In addition in the real estate downside situation, steel consumption is expected to be uncertain."

　　"After the current round of price increases, prices are gradually approaching the psychological price of traders, the willingness to ship or gradually increase, the expected price or tend to strengthen." Mysteel pointed out that "from the inventory structure, this year's steel mills since the proportion of storage compared to previous years slightly increased, for the post-holiday price has a greater say, or there will be a short period of 'no amount of empty up', the later consumption recovery time and intensity will determine the winter storage this year. "

　　Peak back down

　　Thanks to the policy end of the strict control of steel production, domestic steel prices in 2021 generally maintained a high level of operation, the steel industry profit performance exceeded expectations.

　　From the data of the first three quarters of 2021, domestic key steel enterprises achieved profits of up to 319.3 billion yuan, 27 smelting steel listed companies in the first three quarters of the combined net profit of up to 104.5 billion yuan, an increase of 169.9%. The net profit of many listed steel companies hit the peak level since the historical record, while the last round of such a booming period in the steel industry or in 2007.