August steel market will be weak shock

Source:China Metallurgical News    Time:14 August 2023

Ren Qingping introduced that since June, the strength of steel demand is generally not strong, the price of steel raw fuel is high, and steel enterprises are facing losses. With the introduction of a series of policy measures to stabilize growth and expand domestic demand, steel prices have risen. However, in some regional markets, this round of gains have been met with some resistance.

"At the end of July, construction steel prices fell in the Shanghai market." Ren Qingping explained that this is the result of weak end demand. He said that at present, the weak demand situation in the field of real estate and infrastructure has not changed significantly, resulting in a reduction in the demand for construction steel, and the price shock of construction steel market has fallen. In addition, recently, many areas of the country increased high temperature, heavy rain weather, some areas are also affected by typhoons, causing a greater impact on local construction projects, affecting the smooth operation of the regional steel market, making the steel market that was originally in the off-season demand is worse.

Ren Qingping expects that the steel market in August will be weak shock adjustment, but not depth adjustment.

In this context, the market's expectations for the introduction of crude steel production reduction policies are increasingly strong.

It is understood that at present, steel enterprises in some areas have been implementing the policy of crude steel production reduction. According to reports, steel enterprises in Yunnan Province have received documents related to crude steel production reduction, requiring enterprises to "propose a crude steel production reduction task plan according to the province's 2023 crude steel production control objectives and work arrangements, against the 2022 crude steel production assessment objectives and combined with the actual production and operation of steel enterprises." Some steel companies in eastern China also said they had received verbal notices asking them not to produce more steel this year than 2022.

Ren Qingping believes that with the introduction of the production control policy, the supply and demand pattern of the steel market will tend to be balanced, which is conducive to alleviating the contradiction between supply and demand in the current steel market and further curbing the deep decline in steel prices.

"However, the effect of the policy may be difficult to show in August." Ren Qingping explained that during the upcoming "gold nine silver ten" period, the enthusiasm of iron and steel enterprises to actively limit production and reduce production is not strong, therefore, it is expected that the production control effect is limited in the third quarter, and the production reduction will be concentrated in November and December.

"Hebei, Jiangsu and other steel-producing provinces will be the focus of attention, especially the limited production situation in Tangshan, Hebei, will have a small impact on the steel market supply." Ren Qingping predicted. At the same time, recently, the state has intensively launched a number of policies to stabilize the economy and expand domestic demand, which has injected impetus to pull the "steel demand", which is conducive to the release of effective demand for downstream terminals, and supports the stable operation of steel prices.

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