The domestic steel market does not have the momentum to rebound sharply

After experiencing the "black one week", the steel traders suffering from the collapse of steel prices finally ushered in the glimmer of first-line rebound. Since the beginning of last Friday, with the slight recovery in the forward market, some spot prices in the spot market have experienced a tentative rebound. On the opening of the market this week, both the internal and external markets have strengthened the confidence of the merchants. . As spot prices fell to the bottom of the cost line and steel mills gradually reduced their production and overhaul, some dealers were optimistic that the rebound of the domestic steel market may not be far behind.

According to the monitoring data, in the past week, the domestic steel market has experienced a full-scale slump, with hot rolled coils declining most rapidly, and most of the domestic markets represented by Shanghai, Tianjin and Guangzhou have fallen by 400. Above RMB/ton, spot prices in most North China markets fell below the psychologically low level of 4,000 yuan/tonne, and the plunge in prices is even more alarming. Even at such low prices, the market is basically unattractive. It should be The domestic steel market in the peak season of traditional transactions entered the winter in advance.

However, as steel traders frowned and generally lost confidence in the market, the long-term market finally began to rebound on Friday, and it rose sharply on Monday afternoon. Some varieties were approaching the daily limit. This undoubtedly gave the steel trader a shot to “strengthen the spirit.” In response, the spot price of domestic steel products also quickly rebounded and rebounded. The rapid growth of some of the previous market’s gains was equally astounding; at the same time, the merchants reflected the market’s outflow. The goods also showed significant improvement. Some of the merchants who were preparing to buy the bottom and the merchants that covered the stocks had shots and jointly promoted a rapid rebound in market prices.

However, when the price rises and falls, steel traders should remain calm. After all, from an objective point of view, the current domestic steel market does not have effective support for sharp rises. On the contrary, the negative factors that constrain the continued decline in early steel prices still exist. Some analysts believe that there has been some artificial factors in the rapid rise in prices in recent days, and there is a rebound in the retaliatory rebound of steel traders after prices have fallen. In addition, steel traders believe that the improvement in demand and the increase in the number of steel mill overhauls are not enough to support a significant increase in steel prices.

First of all, from the perspective of demand, the demand reflected by some markets in recent days has improved, mostly by the “buying up” behavior of middlemen “mining the bottom” and some resource-starved businesses. Terminal demand is still weak, and market inventories are not substantively digested. In the short term, with the continued deepening of the European debt crisis and the country’s stringent regulation of real estate, domestic steel downstream companies such as automobiles, machinery, home appliances, real estate, etc. are facing declining demand, resulting in a substantial reduction in demand for steel products. In the later period, downstream demand may continue to decline.

In addition, the financial aspects of tension is also another limiting resistance to steel prices. A few days ago, some economic analysts said that the current moderately tight monetary policy will exceed the expectations of everyone. The CPI will gradually fall back, and the short-term relaxation of the market's expected monetary policy may fail. The economic data for September and October this year is equivalent to the level of November 2008. Prices have dropped significantly. At the very end of the tightening effect, if there are no major external or internal shocks, this policy pattern will continue for a long time. It is expected that the policy tone will remain basically the same next year. This also indicates that the tight financing situation of steel traders is difficult to change in a short time.

Let's look at inventory. Although there is information, with the continuous decline in steel prices, the recently announced reduction in production and maintenance of steel mills have increased; analysts said: The steel mills overhaul reduction of the overall output is still relatively limited, is expected to follow-up reduction will increase, the entire The month-on-month decline in steel output will expand. According to the statistics of China Iron and Steel Association, the daily output of crude steel in the country in early October was 1,933,900 tons, which was a 0.18% increase compared to the previous period. Steel mills' capacity release was still at a relatively high level.

For the market outlook, most analysts agree with the author's point of view that the domestic steel market is still lacking an effective driving force for a sharp rebound. Even if there is a sharp pull-up in a short time, it will eventually return to a rational track. After all, with the shrinking of demand, it has made it difficult for marketers to sell their resources, and the cycle of capital withdrawal has also been lengthened, which has also affected the market mentality. As for when the steel price can really rebound, some people in the industry pointed out that the current production cuts of the steel mills are not large, mainly because the reduction in steel prices will increase the average cost. At the same time, the current decline in ore prices is also very obvious, steel mills must digest the high-cost ore purchased in the previous period before they have the opportunity to purchase low-cost ore. Judging from the current situation, the current sluggish steel market will likely reappear after the major steel mills substantially reduced production and stabilized.