“In May, steel prices are still likely to fluctuate and bottom out. Only when confidence is restored, the market is expected to usher in a trend rebound after oversold.”
In the industry,at the monthly steel market market analysis meeting held by the organization a few days ago, Wang Jianhua, the chief analyst of my steel network, made a prediction on the recent steel market trend. “Don’t expect
much improvement in demand. Only supply-side reduction is the only way to restore steel prices and profits.” Wang Jianhua proposed that entering MayAt this point, the periodical pessimism may continue to be released. When the fundamentals of supply and demand achieve a new balance, the market is expected to usher in a rebound. Many market participants feel that the recent market trend of the steel market is somewhat unbelievable. “He said that the construction PMI (Purchasing Managers Index) new order index announced at the end of March fell by 11.9 percentage points to 50.2%. The situation close to the line of prosperity and decline. Wang Jianhua believes that there are two main reasons for this phenomenon: on the one hand, after the Spring Festival, the local government started construction ahead of schedule to achieve a good start; on the other hand, funding problems seriously affected the continuous operation of enterprises.
In addition, supply has become an important factor to restrain the rise of steel prices. “I proposed at the end of March that if steel mills do not strengthen self-discipline and actively reduce production, steel prices will only fall. According to the March crude steel production data released by the National Bureau of Statistics, the annualized crude steel production reached 1.127 billion tons, How can this be digested! He said. “The enthusiasm for market transactions has declined, and the steel trade business has a stronger sense of risk control, which may restrict the release of demand in May. “Wang Jianhua said.
In view of the steel market trend in the later period, Wang Jianhua believes that, first of all, the recovery of market confidence and trading enthusiasm should be accelerated. An important indicator that affects trading enthusiasm is inventory. If steel inventories can continue to decline, it will help boost market confidence. The recent news of production cuts has been frequent, which is also conducive to further reductions.
Lighten the pressure on the fundamentals and help the market restore confidence. “Although the rebound in steel prices may be late, it will definitely happen.” Wang Jianhua said. Secondly, from the perspective of supply and demand balance, the purpose of production cuts is to induce qualitative changes through quantitative changes. The key to quantitative change lies in the average daily output of molten iron. According to incomplete statistics, as of the end of April, more than 40 steel enterprises across the country have announced plans for furnace stewing, maintenance, and production reduction. It is estimated that the national average daily output of molten iron must be at least below 2.33 million tons before the market is expected to see a relatively solid and sustained rebound. It is obvious that the reduction of production by steel enterprises is not enough at present, which means “squeezing toothpaste”. Finally, whether the price of steel falls to the right level depends on whether the price of raw materials and fuels falls to the right level, and the price of raw materials and fuels depends on whether the production reduction of molten iron is in place. However, the production reduction of molten iron has not yet been in place, so the price of raw materials and fuels may continue to fall. “However, whether it is from a fundamental perspective or from a macroeconomic perspective, the Wumu steel market environment is better than that in June and July last year.” Wang Jianhua said.
Post time: May-22-2023