Is the domestic steel market entering the “winter reserve period”?

After the traditional “golden nine and silver ten” peak demand seasons, but the obvious characteristics of the peak season are not prosperous, the basic logic of the domestic steel market trend is quietly changing. “How will logic affect the trend of the steel market?” The author will analyze from the following aspects.

First, from the perspective of demand, since November, the domestic steel spot market has shown obvious signs of insufficient demand. Especially the real estate industry is becoming more and more suppressed by policies, and construction and new construction are obviously insufficient. At the same time, the infrastructure industry has recovered from the impact of insufficient funds. Although the Ministry of Finance requires that the issuance of new special bonds should be completed by the end of November, the issuance of special bonds will continue to accelerate, which will effectively drive the expansion of effective investment in infrastructure and other fields. , But this winter will likely face a cold winter, and the impact of the weather will become more obvious. For the manufacturing industry, under the constraints of high costs, the overall manufacturing industry is likely to show a trend of weakening, but the demand for some industries is still rising significantly, so the demand for industrial steel will be differentiated, and the overall trend will be shrinking. .

Second, from the perspective of supply, in the context of policy-based production reductions, the implementation of production restrictions in the autumn and winter regions will be more stringent. At the same time, the northern region around Beijing will also be affected by the Winter Olympics, and atmospheric protection measures will also be effective. The release of regional output poses greater constraints. At the same time, the sharp drop in the domestic steel market price has now approached the production costs of steel mills. From the significant drop in crude steel output of large and medium-sized steel companies in late October, it can be seen that the profit The sharp contraction is forcing steel mills to actively reduce production, so the contraction on the supply side in the later period may exceed expectations.

In the short term, the domestic steel market is going out of the logic of “demand” and gradually entering the logic of “winter storage”. Under the logic of “winter storage”, the domestic steel market will face a situation of weak supply and demand, domestic steel prices and steel mill production Costs will show a clear game situation, and the decline in steel production costs will become the key to whether the “winter storage” can take place.