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Declining demand, rising stocks, steel prices rising again

Time: Sep 23, 2020 Views: 0

By the end of the year, steel demand dropped again and again, while production and inventory gradually picked up, and the relationship between market supply and demand had changed. However, steel prices rose again after a slight correction. Today, the rebar futures price rose by more than 100 yuan, and the rebar spot price remained high.

Today's rebar futures saw a shock of more than 100 yuan in the intraday trading, and once rushed to the 4400 yuan mark; in the end, the main rebar futures contract on the Shanghai Futures Exchange closed at 4360 yuan/ton, an increase of 79 yuan/ton, or 1.85%. This week, rebar futures fluctuated more than 100 yuan in intraday trading. According to the monitoring data of the Lange Steel Cloud Business Platform, as of January 15, the average price of Grade 3 rebar (Φ25mm) in the top ten major cities in China was 4302 yuan/ton, a slight increase of 14 yuan/ton.

Lange Steel Network analyst Ma Guanghui said that the rise of rebar futures was affected by two factors. First, today is the delivery date of the 01 contract, so the price has fluctuated. At the same time, the US "quasi-president" Biden launched a new crown virus rescue plan with a scale of up to 1.9 trillion U.S. dollars to provide relief to the US economy and stimulate the market.

However, this continuity futures prices increase of rebar has yet to be verified. Due to the recent impact of the weather, the new crown pneumonia epidemic and the approach of the Lunar New Year, steel demand has repeatedly declined. Many parts of the north have all been suspended, Hebei is currently in a state of suspension, and some workers have already returned home ahead of schedule.

Declining demand, rising stocks, steel prices rising again

Lange Steel Network analyst Ma Guanghui said that the rise of rebar futures was affected by two factors. First, today is the delivery date of the 01 contract, so the price has fluctuated. At the same time, the US "quasi-president" Biden launched a new crown virus rescue plan with a scale of up to 1.9 trillion U.S. dollars to provide relief to the US economy and stimulate the market.

However, the continuity of this wave of rebar futures prices has yet to be verified. Due to the recent impact of the weather, the new crown pneumonia epidemic and the approach of the Lunar New Year, steel demand has repeatedly declined. Many parts of the north have all been suspended, Hebei is currently in a state of suspension, and some workers have already returned home ahead of schedule.

It can also be seen from recent relevant data that the current shipments are also falling. According to the monitoring data of the Lange Steel Cloud Business Platform, in January 14th, 10 major building materials companies in Beijing shipped a total of 3,700 tons, a decrease of 5,700 tons from the 9,400 tons at the beginning of the month, a decline of 60.64%.

Demand has fallen, but output has picked up. According to data released by the China Iron and Steel Association on the 13th, in early January 2021, key statistical steel companies produced a total of 21,956,100 tons of crude steel, 20,519,900 tons of steel, and 2,195,600 tons of crude steel, an increase of 1.51% month-on-month and 11.58% year-on-year; Steel products were 2.0519 million tons, a decrease of 8.31% month-on-month and an increase of 11.94% year-on-year.

According to estimates of the output of key statistical iron and steel enterprises, in the first ten days of January, the country produced a total of 29,253,800 tons of crude steel and a daily output of 2,925,400 tons of crude steel, an increase of 1.14% month-on-month and 10.40% year-on-year.

Declining demand and increasing output have naturally seen a significant increase in inventories. According to the monitoring data of the Lange Steel Cloud Business Platform, on January 15, the social inventory of 29 key cities on the Lange Steel Network was 8.598 million tons, an increase of 331,000 tons from the previous week, an increase of 4%.

The current market supply and demand situation has changed. In previous years, steel prices have gradually fallen into an adjustment period, and steel traders have also begun to "winter storage" gradually. However, this "convention" may be broken this year, and the current prices discourage steel traders who want "winter storage".

Lange Steel Network analyst Ma Guanghui said that the current trend of rebar futures has not broken away from the wide fluctuation range, and the trend market conditions are not established. After the completion of the agency 01 contract, the futures will eventually return to reality simultaneously.

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