December steel market still has possibility of exploration

After a weak market adjustment in November, “lower downstream demand, no sale”, “difficult shipment, no procurement”, “tight funding, poor demand, hardship”, “reduced site demand, arrears”, “ "There is a lack of confidence in the market outlook," "Feelings are in the end, and we have to go up next month." "Watch a low price point at the end of the year to see where we can go and whether we can sell it as a winter storage?" It is the personal feelings of steel traders.

The author analyzes that the steel market is still operating at a low level during the year, mainly based on the following three aspects:

1. If the shutdown of the steel mill can continue, the supply and demand balance needs to be reduced.

In October, domestic crude steel output fell to 54.67 million tons. According to data released by the China Iron and Steel Association, the maximum daily production in June was 2.018 million tons in June, and it fell to 1.664 million tons in mid-November. However, relative to the deceleration of fixed asset investment and real estate development, as well as the lack of growth in the overall manufacturing industry and the declining prospects for the export of steel products, the reduction in steel production inside and outside the country has not yet been achieved.

Lange Steel Information Research Center statistics, at the end of November the nation's 29 major cities, steel society stocks fell sharply to 13.52 million tons, compared with October decreased 1.3 million tons. All major varieties declined, including wire rods dropped by 286,000 tons; threading dropped by 689,000 tons; hot rolling dropped by 159,000 tons; cold rolling decreased by 38,000 tons; and medium plate fell by 116,000 tons. The largest thread reduction, accounting for 53% of the decline.

In the market, the overall turnover was sluggish, shipments were difficult, and steel mill stocks rose. According to the data from China Iron and Steel Association in mid-November, the inventory of key steel companies still exceeded 10 million tons.

According to the law of the past, reducing production and digesting stocks, the market will stabilize and stabilize for 2 to 3 months.

Starting in October, the scale of maintenance of the finished steel product line was expanded, and the blast furnace converter was shut down for overhaul. The daily decline in crude steel production was significant. However, the blast furnace and production line that was overhauled in November started production basically. In December, the inspection and shutdown of the furnace was not much. As a result, production capacity will continue to be released, which will put pressure on the market again.

Second, the demand for manufacturing industry has shrunk. The downturn in the downstream demand of the steel industry has been difficult to turn around.

In November, the domestic manufacturing PMI index was 49.0%, which has declined for 8 consecutive months. The index has entered the contraction range for the first time since March 2009, and is below the historical average of 2.9 percentage points; five sub-indices of manufacturing PMI All of the declines indicate that the overall operation of the manufacturing industry has weakened.

Among them, the production index was 50.9%, which fell by 1.4 percentage points from the previous month and fell to the lowest point since February 2009. In addition to the continuous growth of the transportation equipment manufacturing industry, the downstream steel industry saw a significant decline in the production of special equipment, instrumentation, culture, and office machinery manufacturing industries.

The finished goods inventory index was 53.1%, which was the highest since the survey. The new orders index was 47.8%. It fell below the critical point for the first time, and the export order index dropped sharply to 45.6%.

Decline in production, increase in finished product inventories, and reduction in new orders will inhibit future growth in the company's production in the future; both domestic production and export markets show a declining trend in demand for steel products, and downward pressure on the plate market price will increase.

From another point of view, the demand for supplemental steel in the steel downstream steel industry was analyzed. Due to tight funding and high costs in 2011, together with the high production capacity and abundant supply of resources for steel enterprises, steel companies waited for purchases, and the inventory index of major raw materials continued to be 7 The month is below the critical point, with 46.7% in November, the lowest since July 2009. Among them, the inventory of major raw materials of the metal products industry, special equipment and instrumentation, culture, and office machinery manufacturing industry fell significantly.

At the same time, the decrease in purchases and the decrease in inventory also observing the growth of production. The accumulative growth rate of the four industries was lower than that at the beginning of the year, indicating that the production fell and the demand for steel products decreased.

The growing shortage of funds is also one of the factors that companies change their purchasing methods. The central bank cuts the deposit reserve ratio and supports the real economy, which is favorable to the recent easing of corporate funds for procurement.

Third, low-cost resources entered the market, increasing downward pressure on prices.

In December, due to the lower raw material costs of iron ore price drop in the previous two months, the steel produced will enter the market, and the price pressure on the previous high-priced resources will create downward pressure on the market.

In general, the recent national macro-fine-tuning efforts have increased. The actual demand of the steel market years ago mainly relied on the manufacturing sector, low-priced bottom-ups, and the current low inventory of steel traders and winter reserves.

But this depends on the judgment of the actual market demand in the next year, the restoration of confidence and the degree of funding. At present, the market is still in an observation period, and the trend is not clear. It is expected that the market will continue to operate weakly in December, and the pressure on corporate banks to repay loans and orders during the month will increase. During the year, there will be no short-term investigation.