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In the short term, the steel pipe market will continue the “weak supply and demand” situation

Has entered the late may, but the steel market is still hovering in a weak situation, demand continues to shrink, trading is still cold, steel price shock down. Ren Qingping, chairman of Shanghai Wubo Steel Structural Materials Co., LTD., said in an interview with China Metallurgical News on May 20 that the steel market is expected to continue the “weak supply and demand” situation in the short term.
As of May 20, Shanghai area diameter 8 mm HPB300 high line price fell 60 yuan/ton week on month, diameter 20 mm HRB400 rebar price fell 130 yuan/ton week on month, 20 mm Q235B medium thick plate price fell 50 yuan/ton week on month, 5.5 mm Q235B hot rolled coil plate price fell 80 yuan/ton week on month… … Shanghai market mainstream steel varieties are falling in shock.
Ren Qingping in this analysis, the main reason for the continuous decline of steel prices is blocked demand release, “steel demand” strength weakened. Since March this year, the domestic epidemic has been spreading in many places, transportation and logistics have been blocked, downstream steel enterprises have stopped production, and the demand for steel has decreased significantly. Actual steel consumption in China’s main steel industry fell 5 per cent year-on-year in the first quarter, according to cISA data. In April, the epidemic continued to spread, especially in Shanghai, where the epidemic prevention and control situation was severe and the regional market was basically stagnant.
According to incomplete statistics, a total of 16,097 projects were started in April, down 3.8% from the previous month. Total investment reached 5.7712 trillion yuan, down 17.1% from the previous month. Enter may, steel city “need weak” situation did not change.
At the same time, the steel market “weak” characteristics are also very obvious. Affected by the epidemic, logistics and transportation are not smooth, and the supply of raw steel fuel is tight, which restricts the release of steel enterprises’ capacity. According to incomplete statistics, in early May a number of steel enterprises began to stop production maintenance. A steel company plans to overhaul a 2500 cubic meter blast furnace for 31 days, which is expected to affect the production of 201,500 tons of molten iron. According to statistics, in the first ten days of May, the average daily output of crude steel, pig iron and steel of key iron and steel enterprises reached 2,305,300 tons, 2,031,700 tons and 2,162,000 tons respectively, down 2.26%, 0.47% and 5.73% respectively.
Recently, the National Development and Reform Commission (NDRC) issued a notice to all localities on the verification of the assessment base for the reduction of crude steel output in 2022, requiring all localities to verify and feedback the assessment base. The National Development and Reform Commission (NDRC), the Ministry of Industry and Information Technology (MIIT), the Ministry of Ecology and Environment (MEE) and the National Bureau of Statistics (NBS) will continue to reduce crude steel output nationwide in 2022, in order to maintain continuity and stability of the policy and consolidate the results of crude steel output reduction, the NDRC said. Ren Qingping believes that this fundamentally determines this year’s steel production will be less than last year, steel market overall supply pressure is not big.
In addition, he specifically reminded market participants to focus on the following uncertainties affecting market trends:
First, the impact of the epidemic on the effective demand of downstream terminals. At present, the epidemic prevention and control situation in some regions of China is still grim. There are still many new cases in Beijing and Sichuan every day, and the risk of community transmission has not been completely blocked. Henan, Jiangsu, Zhejiang, Jiangxi and Liaoning provinces have yet to achieve “dynamic zero clearance”. Although the situation in Shanghai has eased, it is still unstable. Steel enterprises in these areas have not fully resumed production, the release of late steel demand has a certain impact.
Second, the cost end of the steel price support strength reduced. Recently, iron ore, coking coal, coke, scrap steel and other raw fuel prices have fluctuated. By the middle of May, coking coal prices fell 200 yuan/ton ~ 300 yuan/ton; Coke price has been lowered for two consecutive rounds, totaling 400 yuan/ton; Scrap prices across the board. As steel raw fuel prices fell, steel production cost pressure has eased. In this case, steel enterprises to digest inventory, actively adjust steel factory prices. A few days ago, a group of large steel enterprises introduced the steel factory price policy in June, including cold and hot rolled coil prices down 100 yuan/ton ~ 200 yuan/ton, rebar, wire prices down 100 yuan/ton. It can be seen that the cost end of steel price support strength reduced, which will bring a certain impact on the late market.
Third, the intensive introduction of favorable macro policies helped release demand. China has recently introduced a series of policies and measures on epidemic prevention and control, steady economic growth, building a unified domestic market, and laying out large-scale infrastructure. A meeting of the Political Bureau of the COMMUNIST Party of China (CPC) Central Committee recently stressed the need to speed up the implementation of established policies, implement tax rebates, tax cuts and fees, and make good use of various monetary policy tools. The 11th meeting of the Financial and Economic Commission of the CPC Central Committee in late April called for comprehensive infrastructure construction. With the implementation of a series of macro policies and measures to stabilize the economy and investment, infrastructure development will continue to increase, injecting strong impetus into the growth of steel demand.

Post time: May-30-2022