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Lange report: “supply and demand double weak” steel price downward pressure is larger

From August onwards, steel production began to pick up speed as profits continued to repair and steel mills became more active. In early September, the crude steel production has been “turned positive” year on year. However, after entering October, the crude steel production has declined, and the blast furnace operating rate has continued to decline.

According to the data of China Iron and Steel Association, in the first ten days of October, key statistics steel enterprises produced a total of 21.0775 million tons of crude steel and 2017.120 million tons of steel. The daily output of crude steel was 2.177 million tons, down by 1. 11%. The daily output of steel products was 2.071 million tons, down 9.19% from the previous month.

According to the latest phase of the national blast furnace operating rate survey data from Lange steel network, on October 13, the average operating rate of 201 iron and steel enterprises in the country is 79%, down 1.5 percentage points compared with the previous week, and has been declining for two consecutive weeks, and the rate of decline is accelerating.

Why the fall in steel production? Can it continue to decline in the later period?

Wang Yingguang, senior analyst of Lange Steel Net, said that the current decline in steel production is not too big, which is within the range of normal fluctuations. Late need to pay attention to the trend of steel prices and steel profits, if they are relatively low, the output will fall. In addition, also need to pay attention to the policy changes, a crude steel pressure reduction policy and the specific situation of autumn and winter production limit.

First from the perspective of steel profits, according to the Lange steel Research Center monitoring data shows that in September, with the steel price of the monthly average of a small decline, the monthly average profit compared with the previous month has shrunk. Taking the tertiary rebar as an example, the gross profit space in September was reduced by 99 yuan/ton compared with the previous month based on the immediate raw material cost. The gross profit space measured by the two-week raw material inventory cycle is 193 yuan/ton less than last month, which is a very significant reduction. Steel mills profit obviously fall, will produce obvious influence to production enthusiasm.

According to Lange steel net research, recently, some Tangshan billet rolling enterprises affected by profits also began to reduce production, and some steel enterprises also began to carry out planned overhaul.

Lange steel research center director Wang Guoqing said that from the cost end, early ore, coke average price is mixed, the cost end is still resilient. Lange Steel Research Center expects some improvement in steel earnings in October, but the scope is relatively limited.

From the point of view of the production limit policy, the current production limit is mainly to limit sintering, for the blast furnace end of the steel plant is not particularly big restrictions. But as the “20″ meeting is approaching, or will issue relevant measures to limit production. At the same time, the autumn and winter heating season of the wrong peak production plan will also be introduced, which will form a certain restriction effect on the late crude steel output.

In addition, recently, the country has repeatedly stressed that the epidemic prevention and control work will not waver, adhering to the general strategy of “preventing imports from outside and preventing rebound at home” and the general policy of “dynamic zero elimination”. As a result, the epidemic prevention policies in various regions are becoming increasingly strict. At present, many regions in Inner Mongolia, Shanxi and other places are in a silent state, which has had a significant impact on transportation and logistics. At the same time, some of the more severely affected areas of steel mills have begun to cut production or close some production lines, which will also affect certain output.

The decline in production, so that this week’s social inventory also “from the rise to fall”. According to Lange steel cloud business platform monitoring data shows that on October 14, 29 key cities nationwide steel social inventory is 9.895 million tons, reduced by 220,000 tons last week, a decrease of 2.17%.

And the demand side, affected by the epidemic and other factors, the recent overall shipment has declined significantly. Take Beijing as an example, according to the Lange steel cloud business platform monitoring data shows that the 10 large Beijing building materials market after the holiday average daily shipment of 7366.7 tons, compared with the last week of September average daily shipment of 10840 tons, decreased by 3473.3 tons, a decline of 32.04%.

Wang Yingguang said that the current state of supply and demand is weak, market confidence is insufficient, spot with the impact of small fluctuations. In the short term, there is still downward pressure on steel prices.

Post time: Oct-18-2022