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BBN steel analysis: main features of current steel market

The current steel market operation mainly exhibits the following characteristics:
First, the obvious impact of environmental protection and production restrictions. Tangshan City, as a major steel town in China, accounts for almost half of the crude steel output in Hebei Province, and stricter environmental protection has a greater impact on steel output in Tangshan.

The second is the slowdown in social inventory growth. After the Spring Festival this year, affected by the call for "Chinese New Year in working place", the progress of the resumption of downstream projects was earlier than in previous years. In mid-to-early March, with the rapid increase in construction sites and factory operating rates, the demand for steel gradually released, the growth of steel social stocks began to slow down, and the relationship between supply and demand in the market improved.

From the downstream industry perspective, the sales of excavators, loaders, internal combustion engines, automobiles and other products have maintained a substantial growth trend, and export demand has also maintained a high growth trend, which shows that the current domestic and foreign manufacturing demand is strong.

Third, the market has strong bullish sentiment. At present, the prices of raw materials and fuels such as iron ore have weakened, the spot price of coke has started the sixth round of downward adjustment, and the price of steel has remained high. On the whole, the current market has strong bullish sentiment, which is conducive to rising prices of finished products.

From the perspective of the international economic environment, the European Central Bank and the Federal Reserve have successively stated that monetary policy will continue to be loose in order to promote economic recovery. This is expected to form an indirect support for the prices of domestic black products.

Fourth, the status of downstream customers varies. Cold rolling steel customers received less orders after the Spring Festival, especially for export orders, which basically focused on digesting orders before the Spring Festival. Affected by the low price of steel pipes, steel pipe customers generally have relatively high inventories. According to the current strip steel prices, the pipe factory is in a state of inverted profits. In addition, steel prices have soared after the Spring Festival, and the fear of heights of the customers of the steel pipe plants has increased, and the enthusiasm of the delivery of goods has been greatly reduced.

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