Since the Spring Festival in 2022, the positive macro expectations around the Spring Festival have been driven by the rise in prices, but since downstream demand has not yet fully started, the market is in a state of pricelessness, and spot prices have risen greatly;
enters March, affected by the tight capital market, the pace of resumption of work in the downstream is significantly slower, and consumption data has declined significantly year-on-year compared with previous years, 
Figure 1:
Figure 2: Threads in major cities in the north and south regions in recent years
Figure 3:
Figure 4: Trading volume of sample traders in Guangzhou in recent years Source: Mysteel
From January to June 2022, the average daily transaction volume of construction steel in the national period was about 148,800 tons, a decrease of 38,896 tons year-on-year, a year-on-year decrease of 20.72%; from January to June, the average daily transaction volume of 10 traders in the Guangdong market was about 11,695 tons, a year-on-year decrease of 3.5%.
On the one hand, after the Spring Festival, the epidemic situation occurred in many provinces and cities across the country, resulting in different degrees of impact on domestic logistics and warehousing, and the national transaction volume declined year-on-year; however, the Guangzhou market was not affected by the epidemic from February to April, especially the transaction volume rose year-on-year. However, since April, with the continued rainy season in the southern region and other disturbing factors, transactions in the second quarter fell by nearly 20% year-on-year.
Overall, in the first half of 2022, the price of steel in Guangdong threaded in Guangdong province fluctuated wide, with a high of 5,330 yuan/ton in May and a low of 4,490 yuan/ton in June, and the price rose first and then fell.
After the Spring Festival returned, driven by the favorable macroeconomic policies and the rise in futures spirals, steel prices fluctuated upward; then international geopolitical conflicts continued to intensify, the price difference between the internal and external raw materials widened, and consumption declined significantly under the dual effects of the epidemic and tight capital markets, and steel prices fluctuated repeatedly in the macroeconomic improvement and sluggish reality.
In June, as the epidemic situation improved, the resumption of work and production in various places accelerated, but demand recovery was lower than expected, resulting in steel prices continuing to weaken.
2. Market outlook for the second half of 2022
(I) Market supply and demand outlook for the second half of 2022
supply, in fact, in 2022, Guangdong Province's construction steel production capacity increased by 2.4 million tons, mainly due to capacity replacement. However, since the beginning of this year, steel prices have continued to fall and steel mills have continued to fall inverted, resulting in many short-process steel mills being in an unsaturated state since February this year;
was also affected by the continuous high price of scrap steel in , the rise in the fiscal and taxation documents No. 40 and the price of auxiliary materials, and the short-process steel mills suffered losses and production reductions, which also led to a 3.77% year-on-year decline in crude steel production in Guangdong Province from January to May.
However, in the second half of the year, with the continuous implementation of crude steel reduction work, Guangdong and Guangxi may still implement dual energy consumption control plans. However, at present, electric furnaces and blast furnaces are both on the edge of the profit and loss line, and the expected reduction of blast furnaces is insufficient. However, if prices continue to weaken, electric furnaces will continue to maintain active production control in the short term. The marginal output of is difficult to rebound, and it is mainly based on production self-discipline. Even if high-strength production restrictions are maintained in the second half of last year in the future, the overall output release is still relatively limited;
So in the second half of the year, it is expected that the reduction task of crude steel in Guangdong Province throughout the year may be lower than the same level in the same period last year. Since crude steel production declined from January to May, steel mill output in the second half of the year may be subject to crude steel reduction policies and cannot be fully released. It is expected that the overall crude steel in Guangdong Province may decline slightly in 2022.
In terms of demand, although most domestic regions have loosened the property market since the first half of this year and lifted policies such as purchase and loan restrictions. However, the overall market investment confidence is insufficient and the enthusiasm of real estate to acquire land is not high. For example, in May this year, Guangzhou's first centralized land supply was 17 transactions, and one failed to sell. The main reason was to rely on the "guarantee" of central enterprises and state-owned enterprises, and the private enterprise team is still very cautious.
This also shows that both developers and buyers, market confidence still needs to be restored at this stage. At present, greater relaxation of real estate efforts at the policy level is happening, and market demand is expected to gradually recover, but it is difficult to say that it will improve in the current off-season of traditional consumption. It is estimated that real estate demand may be put into force in the fourth quarter.
( 2) 2022 second half of the year market outlook
Currently the spot price is still at the lowest level for the whole year.Although supply is difficult to continue to decline in the short term, the consumer side is expected to gradually improve. With the gradual implementation of macro-favorable policies, demand is expected to cover up, supply and demand fundamentals gradually improve, and steel prices are also expected to show a volatile and strong operating trend.
However, considering that the Federal Reserve's Fed will still have a interest rate hike cycle in the second half of the year, the inflation cycle may have a certain negative impact on commodity . At the same time, under the effect of the policy of ensuring supply and stabilizing prices, it is difficult for raw material prices to continue to rise, and the repeated switching of cost support logic may have a certain drag on the prices of finished materials; at the same time, if the policy of reducing crude steel is to be implemented, there is an expectation of a decline in demand for raw materials, and costs will also loosen.
Therefore, in the short term, we need to continue to pay attention to supply variables, demand recovery status and the development and changes of the epidemic in various regions. The current market is still in a recurring game stage. Under the collision of strong expectations and weak reality, we still need to be cautious and awe of the steel market. It is estimated that steel prices may fluctuate around the range of 4,500-5,000 yuan/ton in the second half of the year, with the price center of gravity moving downward, and the overall performance is low at the beginning and high at the end.
