In May, the domestic steel market was at a time when the traditional low and peak seasons alternated. Due to the impact of repeated epidemics, the release of actual downstream purchase demand was significantly limited. In addition, the apparent decline in coke prices led to the weakening of cost-side support. The domestic steel market showed Obvious shock and fall.
Supply side: As steel mills face the dual pressure of high costs and falling steel prices in the early stage, the production capacity release of steel production enterprises is still under pressure. According to the survey data of Lange Steel Network, the blast furnace operating rate of 100 small and medium-sized steel enterprises nationwide was 82.3% in the first three weeks of May, an increase of only 1.5 percentage points from April. Judging from the ten-day production data of key large and medium-sized iron and steel enterprises, under the guidance of policies such as ensuring supply, stabilizing prices and stabilizing industrial production, large and medium-sized iron and steel production enterprises have maintained the stability of production capacity release. Reduced the willingness to release capacity quickly again.
According to statistics, in the first ten days of May, the average daily output of pig iron of key steel enterprises was 2.0317 million tons, down 0.47% month-on-month and 1.44% year-on-year; the average daily output of crude steel was 2.3052 million tons, down 2.26% month-on-month and 4.65% year-on-year. ; The average daily output of steel is 2.162 million tons, down 5.73% month-on-month and 5.68% year-on-year. According to the estimation of Lange Steel Research Center, the daily crude steel output in May will be maintained at about 3.1 million tons, and the daily crude steel output of key large and medium-sized steel enterprises will be maintained at about 2.3 million tons.
Demand side: At present, the domestic steel market is obviously affected by the contraction of downstream demand, the demand for industrial steel has dropped significantly, the demand for real estate steel is relatively weak, the demand for infrastructure steel has not recovered enough, and domestic enterprises are subject to high costs, and corporate profits continue to rise. Being compressed, the willingness to continue investing is not strong.
On May 15, the People's Bank of China and the China Banking and Insurance Regulatory Commission announced that the lower limit of the interest rate of commercial personal housing loans for the first set of housing will be adjusted to not lower than the market quotation interest rate of loans of the corresponding period minus 20 basis points. On May 20, the People's Bank of China announced the latest loan market quoted interest rate, of which the 1-year LPR was the same as the previous month, and the 5-year LPR was down 15BP from the previous month. On May 23, the executive meeting of the State Council announced a package of measures to stabilize the economy, and the efforts of fiscal policy and structural monetary policy will be more obvious. For the domestic steel market, the continuous introduction of policies to stabilize growth will help stabilize market sentiment, but the slow destocking of steel stocks is also a reality that the spot market has to face.
At present, all localities are still in the process of resuming work and production. However, due to the long supply chain of manufacturing enterprises, they may face the situation that it is easy to resume work and difficult to reach production in the short term, thus limiting the release of demand for manufacturing steel, and for infrastructure steel The demand was also affected by the epidemic control and poor project funding, and the progress and materials usage of the project was not satisfactory.
In June 2022, the prosperity of the steel industry fell back to the contraction range again, indicating that the domestic steel market is shifting to the traditional off-season of demand. Due to the frequent epidemics this year, the traditional peak season is not prosperous, and there is a clear contrast between strong expectations and weak reality. The supply side will be affected by the combination of profit contraction and the policy of ensuring supply and stabilizing prices, showing a trend of release under pressure; the demand side will be affected by the combination of seasonal weakening and insufficient effective construction, the downstream procurement demand may be weaker than expected, and the domestic steel market will Facing the complex situation of "steady growth continues to increase, the supply side is under short-term pressure, the demand side is weakening in the off-season, and the cost side is returning to rationality". The Lange Steel Research Center predicts that the domestic steel market will show a weak bottom in June 2022. According to the actual epidemic control and demand release, domestic steel prices in June may first dip and then rebound.
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