Analysis and forecast of steel price trend in January

The recovery period of domestic steel prices in December 2018 was in a period of collapse. In November, the price fell in a cliff, and the steel market risk was released. In the case of low social stocks and low demand, the market was in a narrow range of consolidation. Then the next entry into January 2019, how will steel prices be interpreted?
The domestic steel price in December was in a recovery period after the collapse. In November, the price fell in a cliff, and the steel market risk was released. In the case of low social stocks and low demand, the market was in a narrow range of consolidation. Then the next entry into January 2019, how will steel prices be interpreted?

As of December 28, the total inventory of major domestic steel products was 8,807,700 tons, a decrease of 249,400 tons from the end of November, a decrease of 2.99%, an increase of 67,200 tons or 0.84% ​​over the same period of last year. Among the top five steel products in China, the inventory of construction steel increased, and the inventory of hot and cold coils and plate continued to decline. Although the stock of social stocks has declined, the inventory in steel mills has increased. Considering that the downstream demand is weaker in January, the overall market inventories will continue to increase. Steel mill inventories will continue to increase in the case of reduced orders. It can be said that steel inventories are under pressure in January.

Judging from the production situation of steel mills, there was no large-scale overhaul of steel mills in December, and many domestic steel companies had routine maintenance. In the northern part of the steel enterprises, environmental protection and production limit, the national blast furnace operating rate decreased for five consecutive weeks. With the increase of domestic rain and snow cooling weather, the downstream procurement demand has become more and more depressed, and more steel enterprises have arranged safe routine maintenance. Therefore, it is expected that the daily average crude steel output will continue to fall next month.

From the raw material market, the domestically produced mineral prices in December were firm, and some of the main producing areas saw a slight increase. The overall market turnover was average. The price of imported ore was strong in December. As the inventory of the port stopped falling, the operating rate of the blast furnace continued to decline, and the price continued to rise. It is estimated that the production cost of domestic steel enterprises will be lower in January. Affected by the collapse of coke in the previous period, the profit of domestic coke coking enterprises shrank sharply. In December, coke showed a steady decline. At the end of the year, it was under pressure from the in-house inventory of coking enterprises, and the pace of procurement of downstream steel enterprises was slow, and the profit recovery at the end of the year was calculated. The price of coke started to fall in the fifth round, and there was still room for decline in the later period.

From the perspective of downstream demand, downstream demand entered the traditional off-season in January, and the country's low-temperature rain and snow weather increased, the overall market demand fell sharply, and demand in the northern region fell to freezing point. Most projects in the South will also enter the final stage, the market demand will also drop sharply, and the overall transaction will gradually shrink.

After the previous steel price plunged, the profitability of domestic steel enterprises shrank sharply, steel enterprises took the initiative to raise the price awareness; the northern part of the country has frequent pollution, environmental protection and production intensity increased, superimposed some steel mills routine maintenance, blast furnace operating rate continued to decrease, steel mills The supply pressure is reduced; the above points form a certain support for steel prices. However, there are also many factors that have a negative impact on steel prices. Although the social inventory is at a low level, the late inventory is in a passive increase stage; the national low-temperature rain and snow weather increases, the terminal procurement demand is shrinking, and the resources of the northern material are increasing. On the whole, it is expected that the price of steel will stabilize after the fall in January. As the year closes, the price continues to fluctuate.

Source: katalor Steel

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