Steel prices fluctuate after waiting for demand relay

After the Ching Ming Festival, with the advent of seasonal weather that is most suitable for outdoor construction, the steel market should usher in the peak demand for steel demand in the first half of the year. However, this year's "Golden III" has just finished its curtain call. The continuing high steel inventory has caused significant supply pressure to the market, while the downstream steel demand has also been difficult to open under the influence of many different interests. Therefore, we believe that after this year's Ching Ming Festival, steel prices may experience a short-term pull-up, but then adjustments may continue to be made when demand cannot be followed up in a timely manner.

Multiple badly intertwined, the steel market has always been weak and difficult to change the factors constraining the largest steel price Terminal demand has always been difficult to form a heavy volume; and market demand is far lower than previously expected, mainly because of bad habits have always dominated, affecting the downstream terminal industry, steel Confidence within the market. Among these, the largest is undoubtedly the issuance of the "National Five-Article" Rule and its local version of the policy. With the "National Five-Year" Local Rules announced in succession, the property market "strickenly strikes" and the steel industry's entire product chain is on April 1. The opening will be hit again.

In addition, in the March manufacturing PMI data released on that day, although the index rebounded again, it was still lower than market expectations, thus forcing the steel market to have serious doubts about whether the demand for steel products could be released to expectations, but also against the traditional Ching Ming Festival. Concerns over whether demand can be concentrated, and the sentiment has weakened; plus the March Steel PMI index released on the same day was only 44.6%, a sharp fall of 14.3 percentage points from February and fell back below the 50% line. This shows that the overall situation of the steel industry is very serious.

Steel demand has not been released during the peak season and market sentiment has weakened. In the just-used “golden three” steel consumption season, China’s steel demand has not been released as expected; the new urbanization strategy that is highly expected by the market is still tense. It is expected that the detailed plan will be issued at the latest at the end of the first half of the year; it is difficult to achieve concrete results for the release of substantial demand from the downstream steel market.

While steel market demand has not been released yet, the upstream steel supply has remained at a high level. The latest statistics show that the nation’s major market has 21.93 million tons of steel in five major steel grades, and estimates that China’s total steel inventories are no less than 80 million tons; this has already been achieved. The history is the highest, causing huge supply pressure to the market. Under this circumstance, the mentality that the merchants have been positively optimistic about the trend in the late period has already changed. With the continuous decline of steel prices, market confidence is gradually eroded by the dismal reality. . Although the steel mills continue to adjust their ex-factory prices, the spot steel price and ex-factory price are still somewhat upside down. However, the excessive resources in the hands have forced the merchants to continuously take the initiative to reduce their prices to seek shipments. It may not be obvious that the effect is as of now; The weakening of market confidence will have a direct impact on the extent and process of inertial pull-ups of steel prices after the Ching Ming Festival.

It is expected that the steel market may rebound after the Ching Ming Festival this year and continue to reorganize the market. On the one hand, downstream demand has always adopted a wait-and-see attitude, mostly on-demand procurement, and the demand fundamentals are not moving because the downstream industry continues to be bearish on steel prices. Psychology; caused the steel market, which was supposed to belong to the season of sales, to be unusually light, and the market trading environment was extremely low. On the other hand, high inventory is like hanging from the top of the sword of Damexi, which may break through the weak trading atmosphere of the current market at any time. The most important thing is that the news of macroscopic transmission is also bad, which further worsens the market mentality. With steel prices plunging in recent days, breaking the strong demand of the 3800 mark, without significant benefits in the short term can obviously not be repaired, the capital market confidence in the steel industry will continue to decline in the indulge.

On the whole, the demand release of the Ching Ming Festival may still have some psychological support. Therefore, there is room for inertia to increase after the Ching Ming Festival. However, due to the weak demand for short-term change, the rally is likely to be short-lived. The possibility of a substantial improvement in an instant does not basically hit, so we believe that after the Qingming Festival, the steel price will continue to return to the narrow-shocked channel after a brief pull-up, waiting for the real relay of demand.