The overall supply and demand situation of the steel industry this winter is not optimistic

In the first two months of the fourth quarter, after the steel price experienced a sharp rise and fall, the market is more sensitive to the trend of steel prices. How will the steel market in the later period develop? Affected by environmental protection policies, production, inventory, etc., how will the supply and demand situation this winter change?

Since entering the heating season this year, steel production has increased significantly. According to the statistics of the National Bureau of Statistics, China's crude steel output in October 2018 was 82.55 million tons, up 9.1% year-on-year. In October, the average daily output of crude steel in China was 2.623 million tons, down 1.19% from the previous month. From January to October, China's crude steel output was 78246. Ten thousand tons, an increase of 6.4%. As the output of crude steel increases, it will inevitably put pressure on the supply and demand relationship in the later period.

According to the monitoring data, in the last heating season, the average operating rate of the kiln of 100 small and medium-sized steel enterprises in Lange Steel Network was 71.9%, the highest was 73.9%, and the lowest was 70.2%. The average value of the three-week entry into the heating season this year is 78.3%, and the current average is 6.4 percentage points higher than the average of the previous year; and there is a gradual increase trend, and some of it is reported that the furnace is actually opened. The situation was very rare last year, and the actual operating rate was much higher than last year. With the increase in the operating rate of blast furnaces in steel enterprises, steel production will be higher than the same period last year.

In terms of inventory, the average inventory of steel in the last heating season steel association was 12.19 million tons, and the last 30-day inventory was the highest. In early November and mid-November, steel inventories of steel enterprises were 12.23 million tons and 13.27 million tons, which were 260,000 tons and 1 million tons higher than the same period of last year. The steel social inventories were in the last heating season, with the highest point reaching 17.65 million tons, an increase of 11.04 million tons from the lowest point, an increase of 167%. According to the monitoring data of the Lange Steel Cloud Business Platform, as of December 7, the social stock of steel in 29 key cities nationwide was 6.867 million tons, which was 213,000 tons higher than the same period of last year.

In terms of the steel production trend in the heating season this year, the overall production in the heating season this year is 10% higher than the same period last year. The production of construction steel in these three months is expected to reach 90 million tons. If the statistical inventory is formed according to about one-eighth, it is expected that at least 11.25 million tons will be invented this year. It is expected that the high steel construction stocks after the Spring Festival this year may be higher than last year. At least 1 million tons in the same period. Inventory pressure is obviously greater than after the Spring Festival last year.

On the demand side, under the influence of policies, the downward trend of investment growth has been reversed. From January to October this year, fixed asset investment increased by 5.7%, 0.3 percentage points higher than the lowest point; real estate investment growth rate has remained relatively high, real estate construction area and new construction area has been a growth trend this year, demand for construction steel Formed a support. In addition, the growth rate of infrastructure investment also improved, from the lowest 3.3% growth rate to 3.7%. According to statistics, in the first 10 months of this year, the total amount of fixed assets investment in railways nationwide was 633.129 billion yuan. In November, the reconstruction and expansion project of Urumqi Airport with a total investment of 42.114 billion yuan was approved. So far, the scale of fixed asset investment projects approved and approved by the National Development and Reform Commission has exceeded 800 billion yuan this year. If the strength of the short-term infrastructure in the post-infrastructure sector continues to strengthen, it will improve the supply and demand of steel.

So, what aspects of the steel market need to focus on in the later period? What is the supply and demand situation of steel in winter this year?

Ma Li, chief analyst of Lange Steel, said that the first thing to pay attention to is the change in the state of steel production. This includes companies that are passively cut by the environmental protection policy and are subject to price reductions below the cost line, and steel companies that have difficulty selling are actively reducing production. At the same time, it is necessary to pay attention to whether the development direction of Sino-US trade wars and the overall macroeconomic policies of the country will undergo major changes. Ma Li believes that the overall supply and demand situation of steel in winter this year is not optimistic, the overall output will maintain a high level, and high inventory will be formed in spring, and steel prices will remain low. (Source: Lange Steel)

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