Steel price rally is expected to continue in September

Although the stabilization and recovery of economic data will not necessarily bring about a rebound in the economic cycle, the low base in August, together with steady growth measures, is gradually showing marked effect. It is expected that the trend of economic data will continue to stabilize and pick up will become a big event. It will continue to support the steel market.

Luo Baihui, chief analyst of Jinmo Steel, pointed out that in the past month, the cyclical industry has generally shown signs of improvement. In addition to the price rises in coal and steel industries, infrastructure data, container freight rates, rail freight turnover, and power generation All show signs of cyclical industry recovery. At the same time, the policy has already shifted to a stable growth, but the steady growth in the second half will be paralleled by structural adjustment and growth promotion. From this point of view, the economy may not continue the downward trend in the second half of the year, which will also underpin the market to a certain extent.

The management once again stated that the policy will maintain the established tone in the second half of the year, and it does not rule out that there will be fine-tuning measures, which also makes the market's expectations of policy relaxation once again fail, and thus pose some pressure on the market.

For a period of time, the market will enter the expected period of repeated volatility, during which periods such as favorable data will stimulate the market, but the impact of tighter funds will also be further manifested. In addition, the QE exit plan for the United States will gradually increase. This will undoubtedly bring greater turbulence to the market. Therefore, the market's expected repair journey has already entered the run-in period from the honeymoon period at the beginning of the month. During this period, the market rhythm depends on the fluctuation of emotions.

With the loosening of billet prices at the weekend and the financial market events on Friday, and the recent end demand continued to be poor, the market turnover has been sluggish. After the market opened this week, the market watched with strong sentiment. Loose, today's mainstream quotes have also entered a steady consolidation operation. For tomorrow, taking into account that the current pull-up power is already clearly insufficient, and the current adverse factors are heavy, it is expected that the mainstream trend will enter stable, weak and consolidation operation tomorrow.

However, Luo Baihui, chief analyst of Jinmo Steel, believes that with the favorable policy release, local infrastructure demand for steel will further drive steel prices. At the same time, iron ore and steel stocks have also fallen to low levels, and there is a supply shortage in certain steel specifications in the market, which has given a strong boost to market confidence and the steel price rally is expected to continue in September.

He said that the continued rise in steel prices in September continued for the following reasons:

First, the supply has decreased and the contradiction between supply and demand has eased. The rebound in the steel market price in July has caused some steel mills to postpone the maintenance scheduled for July until August. In addition, the unusually high temperatures caused the use of electricity, some of the steel mills used limited electricity, and the increase in output fell significantly. The delivery of steel decreased, and inventory continued to decline. At present, the inventory of Class III rebar in Shanghai is about 180,000 tons, which is 40,000 tons less than the previous period of 220,000 tons, and the decline is more obvious. For steel traders, the spot resources are generally not sufficient, and there are out-of-stock and off-staging phenomena. At present, the market in Shanghai is very scarce for Ñ„16mm and Ñ„25mm rebars, and the price is 20~30 yuan/ton higher than the general specifications.

The second is the increase in interest and the release of demand. Recently, railways, urban rails, infrastructure and shantytowns have been continuously warmed up, and major construction projects have started one after another, stimulating demand. In addition, as the high-temperature weather gradually passes, the country is about to usher in the golden period of construction projects, and the demand for construction steel such as rebar and wire rods is expected to increase significantly.

Third, raw material prices have risen and rigid cost support has increased. Recently, the market prices of iron and steel raw materials such as scrap, iron ore, and billets rose slightly. From August 12 to August 18, the ex-factory price of general billet in Tangshan was 3,120 yuan/ton, up by 40 yuan/ton from the previous week; the price of scrap in Jiangsu was 2,510 yuan/ton, up by 50 yuan/ton; the price of coke in Shanxi Province It was unchanged at RMB 1100/ton, while the price of 66% taste dry iron ore in Tangshan was RMB 1,070/ton, up RMB 10/ton. The ex-factory price of steel mills was raised, and the purchase cost of steel traders increased simultaneously.

Luo Baihui said that this wave of construction steel market prices will continue to rise, there will be no sharp decline before the beginning of September, the trend will depend on the supply and demand situation and the cost of the time will change. If there is an outbreak in demand during the peak season, steel prices will rise rapidly. At the same time, he believes that there is no “upside down” in prices in the current steel market, and traders have a slight profit. However, steel traders still have to be the first place to avoid market risks and remain cautiously optimistic.