After the narrow range of shock market in April, the domestic steel market finally ushered in a rebound trend in May, and the market is firm. This round of gains was mainly due to the "dangerous epidemic has been brought under control, steel companies that resumed production are busy, depressed market policies, delayed demand is finally released, and the sluggish economy has recovered". . Although there was a downward trend at the end of the month, it was mainly due to the short-term callback trend after the market expectations were too optimistic, but the overall market volatility did not exceed expectations, and industry insiders are still optimistic about the market outlook.
According to SunSirs monitoring, the steel index on May 28 was 898 points, a decrease of 15.68% from the highest point in the cycle of 1065 points (2017-12-05) and an increase of 82.15% from the lowest point of 493 points on December 20, 2015. (Note: The period refers to 2011-12-01 to the present) It is up 4.91% from the beginning of May, and the maximum amplitude during the month is 5.61%. Overall, the domestic steel industry maintained a major increase in May.
Iron ore: market supply is less than demand, prices are rising steadily.
In May, domestic imported ore prices showed a "steady rise" market, mainly due to low port inventories and high demand from steel mills, forming a short-term "supply less than demand" fundamental upward trend. The data shows that as of May 22, the import iron ore inventory of 45 major ports in the country was 109,260,800 tons, falling for 5 consecutive weeks, and the decline continued to expand, and hit a new low level in three years. However, the inventory level in April remained basically stable, with an average weekly average of 155,295,600 tons. Therefore, the market inventory decreased again, which strongly supported the mine price.
On the other hand, downstream steel mills are producing at full capacity under the trend of profit. The data shows that as of May 22, the blast furnace operating rate of 247 sample steel plants nationwide was 90.49%, which has rebounded for 14 consecutive weeks and set a new high level in five years. And the average weekly operating rate in April basically remained at around 79.63%, while the average weekly operating rate in May was around 90%, so the operating rate remained high and the demand for ore procurement improved significantly, which in turn supported the mine price.
Taken together, the domestic imported mine market shows a "supply less than demand" trend, with the overall price rising strongly. As of May 28, the average price of 62% PB powder ore port car plates in Australia was 729.78 yuan / wet ton, and Brazil's 63.5% Coarse powder price is 796.62 yuan / wet ton, 62% printing powder price is 670.17 yuan / wet ton, up 11.45%, 10.68% and 11.08% respectively from the beginning of May.
Steel: terminal demand is stable, mentality stimulates the market, and prices rise.
In May, the overall performance of the steel industry was significantly better than in April, and steel production and profit margins all rebounded significantly under the price increase. In addition, under the strong expectations of the industry, the futures market has risen for almost one month in a row, resulting in no obvious decline in spot prices under short-term negative factors (increased production, shrinking destocking, and slowing trading volume), maintaining a wide range of shocks. .
From the supply side, as of May 22, the blast furnace operating rate of 247 steel mills nationwide was 90.49%, a weekly increase of 0.65%, a year-on-year increase of 0.39%, and a rebound for 14 consecutive weeks; the utilization rate of blast furnace ironmaking capacity was 90.95%, and the weekly increase 1.00%, an increase of 1.40% year-on-year, and rebounded for 11 consecutive weeks; average daily hot metal production was 2.4209 million tons, a week-on-month increase of 26,700 tons, an increase of 37,200 tons year-on-year, and also rebounded for 11 consecutive weeks. All three data have hit nearly 5 years The new high level indicates that steel mills have a high production enthusiasm under the profit trend, which has also led to a rebound in market supply pressure. In the long run, it has dragged the steel price up.
From the perspective of inventory, as of May 28, the five largest steel social stocks in the country were 15.6224 million tons. Although the decline has been 11 consecutive weeks, the overall decline is gradually shrinking, and the inventory level is still 87.40% higher than that at the beginning of 2020. Inventory pressure It's still bigger.
From the demand side, the data shows that taking the construction steel with the most stocks on the market as an example, although the monthly average transaction volume in May is higher than that in April, the overall average transaction volume is only 0.6 thousand tons higher; and the weekly average transaction volume is basically the same as that in April. quite. Although there were significantly more transactions on certain dates, it was difficult to change the fact that market transactions slowed down overall. In addition, as of May 28, the social stock of construction steel was 10.4079 million tons, a continuous decline of 11 weeks. However, based on the average monthly consumption, the number of days of inventory is still 43 days. Therefore, the market destocking rate is significantly higher than 4 The month will slow down. In the long run, it will suppress steel prices.
However, the two sessions have ended. Although the country does not have a clear GDP indicator and no clear economic growth stimulus measures, the "two new and one heavy" market favorable policies have begun to ferment in the real economy. And Premier Li also pointed out that, instead of flooding the river, it is necessary to keep the water flowing. Therefore, in the long run, economic stimulus or sustained stability, and favorable policies will exist for a long time, so for the basic industries of the national economy, the steel industry is also considered a long-term good.
In summary, SunSirs analyst He Hangsheng believes that the overall supply pressure of the domestic steel industry is still relatively large. Although profits have improved, the marginal benefits brought by the sharp rise in raw material costs will eventually allow end customers to pay. Therefore, the belated demand growth effect, or basically consumed in April-May, the steel market in June wants to improve, and can only find new growth points to promote steel prices to continue to rise. Otherwise, under the pressure of cost, steel mills can only reduce their production; after all, the supply of the imported mine market is reduced. Only due to the special events of the international epidemic, there will be a short-term slowdown. Under the effective control of the future international market, the shipments of international mines "Only increase and not reduce" operation to make up for the previous loss, then the price of the mine will fall back. Therefore, under the domestic steel industry environment, in June, steel prices may have opened up a wide range of shocks under the three major negatives of "no raw materials, lower costs; higher profits, non-stop production; increased supply, and slowed demand." Quotes. The overall trend may be "first fall and then rise, then fall and stabilize", and ultimately the gains will end. It is predicted that the operating range of the SunSirs Steel Index will remain at 850-900 points.
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