Supply pressure highlights the low peak season of steel market

September-October is the traditional peak season of steel market, but this year's peak season of steel market is no longer the market, the performance of relevant stock periods are not warm. Data show that in September, the black industrial chain futures index and the A-share Shenwan I steel index fell by 1.05% and 0.34%, respectively.

Industry insiders said that the current signs of supply pressure in the steel market will continue, so the trend in October is not optimistic. After November, on the premise that the price has fallen to a lower position, the actual terminal demand is driven by the demand of winter storage, and the price trend of steel market is expected to strengthen.

According to Wenhua financial data, the black industry chain futures index fell 0.31% at the close of the day. The main contracts of threaded steel futures in 2001 fell 2.32% to 3404 CNY/ton, hot coil futures in 2001 closed 3416 CNY/ton, down 1.84%, and stainless steel futures in 2002 fell 0.13% to 15675 CNY/ton. Relatively speaking, iron ore futures performed well, with the main 2001 contract closing at 657 CNY/ton, up 0.77%.

Black futures have been showing fatigue recently. The black industrial chain futures index fell 1.05% in September, and the monthly line hit three consecutive clouds.

A shares has also been underperforming in recent years. Wind data show that the Shenwan first-class steel index fell 0.34% in September, and the monthly line hit six Lianyin. Xia Xuezhao, senior researcher of Southwest Futures, said September was the peak season of steel market demand and supply. Since this year, the supply pressure in the steel market has increased significantly compared with last year. In August, the steel inventory level rose to the highest level in the same period in history. Since September, steel stocks have been consumed to a certain extent, but the potential pressure on the supply side has not disappeared, which has become the core factor to suppress steel prices. Under the background of weak fluctuation of steel price, steel plate stocks show a tepid trend accordingly. From the profit point of view, this year's profit per ton of steel in iron and steel enterprises generally declined year on year, and there is a possibility of further compression in the later period. Cao Youming, director of Shanjin Futures Research Institute, said that the reason why steel prices were not hot in September was that crude steel output had increased considerably this year, and the increase of output had a restraining effect on prices. In addition, from the seasonal perspective, market demand is often reflected in prices before, and when the peak consumption season comes, many factors have been realized ahead of time, and prices are easy to adjust. At present, the supply pressure in the steel market will continue, and the trend should not be optimistic unless there is a substantial increase in demand, Xia Xuezhao said. Steel consumption is concentrated in real estate and infrastructure projects, but real estate investment continued to decline in the fourth quarter. Although infrastructure is expected to rebound, it is expected that it will be difficult to effectively boost the steel market.

Cao Youming indicated that there was little possibility of reversal in October. First of all, the environmental protection production restrictions in the northern region are gradually lifted, and the supply should be marginally increased, which still exerts great pressure on prices. Secondly, the price of the main futures contracts corresponds to the market situation in January, and the market often reflects demand expectations in October.

Looking forward to the fourth quarter, Xia Xuezhao said that profits per ton of steel may be further reduced in the fourth quarter, steel stocks may lack better opportunities to participate, investors need to select stocks carefully; the futures market has a short mechanism, investors can consider relying on key resistance level to short. When there is short-term bullish news in the market and the market is stimulated and rebounds, it may provide investors with an ideal time to intervene short.

Cao Youming believes that after November, steel market prices tend to fall to a lower position, but due to the actual terminal demand plus demand for winter storage, follow-up prices will be relatively strong, so futures prices will probably take the lead in restraining and then rising. In terms of trading, it is possible to lay out more single futures midline around November. For the relevant sector stocks, we can also consider the absorption of bargain.