Compared to the slow decline in February, the domestic steel industry in March still has an upward momentum under the nation's accelerated resumption of work and production and national policy benefits. However, the market failed to respond to expectations, which led to a price decline.
Among them, banks across the country have adopted policies such as loan support and interest rate cuts and extensions, and the state has also implemented green channels for key projects, and even proposed "new infrastructure" and other projects to increase market stimulus. However, from the actual situation, long-term favorable projects have promoted short-term price corrections and the market has picked up. However, due to the acceleration of steel mills' resumption of production and resumption of production, the increase in the steel market supply has dragged down steel prices; on the other hand, the shortage of logistics capacity, strict control of load-limiting measures, and the increase in short-term shipments have resulted in warehouse explosions and warehouse backlogs, and inventory backlogs In addition, in the end, the terminal enterprises resumed work, but the recovery of demand was slow, less than market expectations, resulting in fewer transactions, and prices continued to fall.
According to the monitoring of SunSirs, the steel index of the business council on March 26 was 883 points, a decrease of 17.09% from the highest point of the cycle at 1065 points (2017-12-05), a 79.11% increase from the lowest point of 493 points on December 20, 2015. . (Note: The cycle refers to 2011-12-01 to the present) It is down by 6.95% from the beginning of February and 2.43% from the beginning of March. The overall domestic steel industry is still in a downward trend in March.
Iron ore: The contradiction between supply and demand is eased, and prices are firm.
Compared with the rise in speculation in February, the trend of domestic imported ore prices in March was slightly stable, and the overall fluctuation was mainly in a narrow range. On the one hand, due to the continuous decline in port inventory and supply pressure since mid-February (as of March 27, the imported ore inventories of 45 mainstream ports across the country amounted to 116.95 million tons, a continuous decline for 7 weeks, setting a new low level for the year); The blast furnace operating rate of downstream steel mills is slowly picking up and demand is increasing (the same period, the blast furnace operating rate of 247 sample steel plants nationwide was 75.26%, rising for 6 consecutive weeks, setting a new high in 2 months). As a result, the contradiction between supply and demand in the domestic imported ore market has eased, and prices have firmed, which has also eased the decline in steel prices. As of March 27, the average car plate price of 62% PB powder ore in Australia was 666.89 yuan / wet ton, the price of 63.5% coarse powder in Brazil was 706.88 yuan / wet ton, and the price of 62% printing powder was 618.50 yuan / wet ton, respectively. Compared with the beginning of March, it increased by 2.34%, 1.86% and 4.12%.
Steel: The contradiction between supply and demand is still prominent, and prices are weak.
In March, steel prices “stabilized first and then fell”, and the overall performance was relatively optimistic and biased. The supply side has basically recovered, but the demand side is still unsatisfactory.
From the perspective of supply, as of March 27, the blast furnace operating rate of 247 steel plants nationwide was 75.26%, a week-on-month increase of 1.51%, a year-on-year decrease of 0.46%, and a 6-week pick-up. The utilization rate of blast furnace ironmaking capacity increased by 76.19%, and 0.93%, a year-on-year decrease of 2.12%, and rebounded for 4 consecutive weeks; the average daily hot metal production was 2,130,600 tons, an increase of 26,200 tons week-on-month, a year-on-year decrease of 59,400 tons, and also rebounded for 4 weeks. And all three data have reached a new high level in the past two months, indicating that the rate of resumption and production of steel mills has accelerated significantly, and the pressure on the market spot supply has increased. However, the profit rate of steel mills is only about 81%, and the overall level is too low, which may cause steel mills to reduce production later, lock in profits, and support steel prices.
From the perspective of inventory, as of March 27, the nation's top five steel social inventories were 24.964 million tons, which fell for two consecutive weeks, and ended the 13 consecutive rises. However, the overall level is still significantly higher than the beginning of 2020 and is 2.9 times that. Therefore, market inventory pressure is still relatively large under the influence of the current global public health events. However, the emergence of an inflection point also means that the market is improving. In terms of different types, the decline in construction steel stocks is larger than that of sheet metal stocks. On the one hand, infrastructure projects have greater room for growth under the support of national policies, and the resumption date is earlier, so the consumption rate is faster; Most of the enterprises are small and medium-sized labor-intensive enterprises, so the resumption of work is late, the demand is slow, and the capital is tight, so the inventory consumption rate is slow. As a whole, the pressure on social inventories is still high, or steel prices will continue to be dragged down.
From the demand side, according to the National Bureau of Statistics, from January to February 2020, national real estate development investment fell by 16.3% year-on-year. Among them, residential investment fell by 16.0%. In the same period, the floor space of newly started housing fell by 44.9% year-on-year. According to data from the China Automobile Association, automobile production and sales fell by 45.8% and 42% year-on-year respectively. And the output of four household appliances also dropped significantly, among which the output of refrigerators decreased by 37.4% year-on-year; the output of air conditioners decreased by 40.2% year-on-year; Coupled with the ship data, the nationwide shipbuilding completion decreased by 26.7% year-on-year. Therefore, although the overall demand in the first two months was very sluggish, it was also an objective reason. As the national market recovers, delayed demand may erupt in the second quarter.
In summary, SunSirs analyst Hangsheng He believes that the downturn in the domestic steel industry is slowly recovering. Although the supply is still normally high, the inventory is still under pressure, and the demand is not tepid, but with the effective prevention and control of public health incidents in the country and the national welfare policy for the manufacturing industry, the comprehensive development of new infrastructure has been implemented. Coupled with the stimulus of retaliatory consumption by the whole people, steel prices are expected to usher in a comprehensive rebound in the second quarter. Therefore, steel prices are expected to stop falling and stabilize in April. The business community's steel index runs in the range of 880-930 points.
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