Steel prices will continue to rise after a breakthrough rally

For these two weeks of soaring prices, many insiders believe that the results of capital speculation do not have continuity, but relevant market analysts believe that this round of rise is inevitable, and will continue to continue through the east wind of the sales season. Just because of the energy-saving and emission reduction storm, it is inevitable that the price of steel will continue to rise after breaking through the previous period and is expected to continue even further after the holiday.

In order to accomplish the national “Eleventh Five-Year Plan” energy-saving and emission-reduction goal, many provinces and cities across the country have recently adopted punitive tariffs and restrictions on electricity for high-energy-consuming enterprises. The local government is also an unprecedented supporter, and last week it began to switch off power to large and small steel plants, a situation that did not stop short of goals. As the “two-high” key industry steel industry, the focus of energy-saving and emission reduction storms is definitely in the steel industry. This effect was first reflected in the supply of steel. Nationwide small and medium-sized steel mills have cut off electricity and the impact on production capacity is currently still unpredictable and is expected to reach 10% or more. The suspension of production for a period of one month or more, coupled with the onset of the traditional peak season for steel products, will substantially increase demand, while on the one hand it will reduce production, while on the other hand it will increase demand. Even if the three major mines have indicated that the price of iron ore is drastically reduced in the fourth quarter, it still cannot stop the strong rise in steel prices.

The downstream steel industry is doing well, especially in the automotive industry. After the automotive sales market continued to decline for nearly 5 months, the Chinese auto market entered the peak sales season in August, and the market sales volume is expected to increase by 15%. Although the current output is still relatively low, with the rise in market prices, the output will inevitably increase. Coming soon after the National Day holiday, the traditional home appliance sales season is approaching. In order to prepare for the upcoming market battle, home appliance manufacturers have already begun to produce at full capacity. Downstream demand for steel is being released step by step.

High social stocks are gradually being released. After reaching a historic level of 18.58 million tons in March, steel social stocks continued to decline. By the end of August, it was 14.89 million tons, which had fallen by 19.9%. The energy saving and emission reduction that will enter September will again depress the social inventories of steel products. Therefore, we believe that the need to consider inventories in the next two months will put pressure on the upward pressure on steel prices, and the market supply and demand will be justified by energy saving and emission reduction. However, this process is bound to be a surge in steel prices.

As the main force affecting steel prices, real estate has always been the highlight. Real estate control policies have continued to suppress steel prices. However, after more than four months of digestion, the pressure on this area has been adapted to the market. Some time ago, relevant ministries and commissions strongly pushed forward. The construction of affordable housing is also in full swing, which has a huge impact on the price of steel. In the context of continuous improvement in the supply and demand situation of steel products, domestic steel prices should maintain a sustained upward trend.