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1. Analysis of the steel market demand situation in the second half of 2022
1. Analysis of the steel demand for real estate. According to data from the National Bureau of Statistics, the sales area of commercial housing, newly started housing construction area and completed housing fell by 23.6%, 30.6% and 15.3% respectively from the same period last year. The decline in newly started construction area is particularly obvious, which also indicates that the increase in demand for real estate steel will still be restricted in the second half of the year.
The main factors that plague the real estate market in the second half of the year are still the two major problems of insufficient confidence among home buyers and insufficient funds for real estate companies. Judging from the latest statistics, sales of new and second-hand houses in first- and second-tier cities have improved, but the sales situation in third- and fourth-tier cities is not optimistic.
According to the latest data released by China Index Academy , in the first half of 2022, due to adverse factors such as repeated epidemics in various places and weak demand expectations, real estate companies' sales performance showed negative growth. Among them, the average sales of the top 100 domestic real estate companies was 35.64 billion yuan, a year-on-year decrease of 48.6%. It can be said that the freezing of three feet is not a day long, and the real estate industry still has a long way to go to recover.
For a long time, real estate steel has occupied 35-40% of the domestic steel, which means that 350-400 million tons of steel are used in real estate construction every year. If the amount is reduced by about 30%, the steel will be reduced by about 110 million tons this year.
2. Analysis of steel requirements for infrastructure. html In early June, the Ministry of Finance required that the 1.12 trillion yuan new special bonds in 2022 be basically issued by the end of June, and strive to basically be used by the end of August. It can be expected that the financing of a large number of new special bonds will be converted into infrastructure investment in the second half of the year.
5 At the end of May, the State Council will launch 33 new measures to stabilize growth in six aspects, and clearly encourage the construction of key areas such as water conservancy, transportation, underground pipeline corridors and renovation of old communities. Recently, the Ministry of Transport proposed to increase the construction of highways, which will lay a solid foundation for the growth of steel for infrastructure construction in the second half of the year.
1-May Domestic infrastructure investment increased by 8.2% year-on-year. Infrastructure investment will further focus on stabilizing the economy in the second half of the year. It is expected that infrastructure investment will increase by 10% over last year. It is estimated that infrastructure steel used throughout the year will increase by about 35 million tons year-on-year.
3. Analysis of steel demand for manufacturing industry. was affected by the epidemic in the first half of the year, and domestic sales of construction machinery, automobiles, home appliances, etc. fell sharply, but the export situation was good, and the overall trend was shown. The shipbuilding industry maintained a good operating state, and the steel used for manufacturing was basically stable.
In the second half of the year, it is expected that the construction machinery and automobile industries will reverse the downward trend, especially automobiles. Domestic sales of new energy vehicles have increased significantly and the export situation is very good. In addition, the country has increased its support for automobile consumption, and automobile production and sales are expected to increase by about 8% in the second half of the year. The sales of construction machinery will also increase with the increase in infrastructure. In terms of steel usage, it is expected to be the same as last year or slightly increase.
In summary, the steel used in real estate will decrease by 110 million tons, the steel used in infrastructure will increase by 35 million tons, and the steel used in manufacturing and exports will remain stable. It is expected that the demand for steel used throughout the year will decrease by about 75 million tons, most of which is the demand for construction steel. The reduction in production of a large number of electric furnace steel mills in the first half of the year also confirmed this prediction.
2. Analysis of the steel market supply situation in the second half of 2022
According to data from the National Bureau of Statistics, the domestic crude steel production from January to May was 435 million tons, a year-on-year decrease of 8.05%; pig iron production was 361 million tons, a year-on-year decrease of 5.01%. Through data analysis, most of the production cuts come from the arc furnace short-process steel mill, that is, there has been a certain degree of production cuts in construction steel.
Since May, some steel mills have suffered losses due to the large increase in the price of steel raw materials, especially coke. It is estimated that as of June 30, the loss per ton of rebar production reached about 190 yuan, and the loss per ton of hot coil reached about 260 yuan. In previous years, steel mills only started large-scale maintenance in July and August, but this year, due to losses, they advanced to the end of June.
On April 19, the National Development and Reform Commission stated at a press conference that the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Ecology and Environment, and the National Bureau of Statistics will continue to carry out the national crude steel production reduction work to ensure that the national crude steel production will decline year-on-year in 2022.Market news said that some provinces and steel mills have received notices of production cuts, but the time for production cuts is not yet determined.
According to the total reduction in steel demand throughout the year, the domestic crude steel production will be reduced by about 50 million tons in 2022. If this goal can be implemented, the supply and demand balance situation in the steel market can basically remain stable.
3. Analysis of iron ore price trend in the second half of 2022
The price of imported iron ore fluctuated significantly back and forth between US$110-140/ton in the first half of the year, which has decreased compared with last year's average price of imported iron ore, but is still at a historical high. Due to the epidemic, the increase in domestic iron ore is limited, with production falling by about 4% year-on-year, and the price remains between 950-1200 yuan/ton.
In the second half of the year, the supply of imported iron ore increased, while international market demand is declining. In terms of domestic ore, with the implementation of the "Basestone Plan", the supply volume has changed from decline to increase. Overall, the supply of iron ore has entered a relatively loose state.
Under the impact of Fed hikes interest rate hiccups again and again, global steel demand has begun to shrink, commodity prices fell at a high level, According to Australian Bank's forecast, iron ore prices will fall to around US$100/ton in the second half of the year and will fall to US$80/ton next year.
The bull market of iron ore prices in the past five years has also reached a turning point of decline. In the second half of the year, with the reduction of crude steel production capacity of steel mills unfolding, after the sharp drop in scrap steel prices in the international market, the window for imported scrap steel has opened, the use of scrap steel in steel mills has become normal, the situation of oversupply of iron ore will appear again, and the center of price will also shift down.
4. Analysis of coke price trends in the second half of 2022
The initiator of the rise in steel prices in the first half of the year was coke, and the "culprit" of the sharp increase in steel mill production costs is also coke. On January 4, the average domestic coke price was 2,669 yuan/ton, and the highest coke price in early May once exceeded 4,000 yuan/ton, an increase of 49.86%. Steel mills complained about this, and the entire steel market suffered greatly.
has many reasons for the sharp rise in coke prices in the first half of the year, but the main reason is the sharp rise in coal prices. Since the outbreak of the Russian-Ukrainian conflict, global oil and natural gas prices have soared, which has led to a rise in coal prices. In mid-June, Australia's coal export quotation exceeded US$400 per ton, setting a record high.
Will coke prices continue to rise in the second half of the year? Won't! The reasons are: First, the government is determined to ensure the supply and price stability of coal, and its measures are firm to curb the tension in coal supply; Second, steel mills increase imports of Mongolian and Russian coking coal to replace Australian coking coal; Third, with the implementation of steel mill reduction policies, coke usage will decrease; Fourth, the extremely high profits of coking coal prices have driven enterprises' enthusiasm for expanding production, and supply will increase.
5. Steel price forecast for the second half of 2022
To sum up, the overall environment of the domestic steel market in the second half of the year will be better than that in the first half of the year. With the stabilization of the real estate market and the development of large-scale infrastructure, the demand for the steel market will increase. The supply of steel market will be reduced due to the implementation of the policy of reducing steel production capacity, and the supply and demand of the steel market will basically remain balanced.
With the gradual decline in iron ore and coke prices in the second half of the year, the profit level of steel mills will return to normal, and the center of gravity of steel prices will also shift down due to the decline in steel raw material prices. The logic of cost support in the first half of the year will no longer exist.
Domestic steel prices stabilized at a low level and fell slightly in the second half of the year, and may become the norm. If there is no interference from emergencies, it is expected that the average price of rebar will run between 3,800 yuan and 4,600 yuan/ton.
