[Article Introduction]
In the first three quarters of 2022, steel prices rose first and then fluctuated and fell, and the price center of gravity moved down. Entering the fourth quarter, despite the slowdown in domestic economic growth, although demand has rebounded, there is limited room for release. Especially after entering mid-to-late November, demand may weaken, and in the fourth quarter, the overall price may show a trend of strong first and weak then weak, and the overall price center of gravity will move downward.
In the first three quarters of 2022, steel prices showed a trend of rising first and then fluctuating and falling, and the overall price center of gravity moved down. Taking rebar and hot coil products as examples, according to Zhuochuang Information data monitoring, as of September 30, the average price of third-level rebar in the national market was 4036.09 yuan/ton, a cumulative price of RMB 597.39 yuan/ton from the beginning of the year, a decrease of 12.89%. The average price of hot coils nationwide is 4042.73 yuan/ton, a cumulative decrease of 758.67 yuan/ton from the beginning of the year, a decrease of 15.08%. According to the analysis of
, the steel price trend in 2022 is mainly divided into two stages. The first stage is from the beginning of the year to the beginning of April. At this stage, the main behavior of price fluctuations is the policy-driven factor. Under the background of the country's continuous release of the "stable growth" policy, demand shows positive expectations to drive price increases. The second stage is from early April to the present, with overall price fluctuating and falling. The main driving factors affecting prices in this stage have changed from previous policy-driven to fundamental-driven. As demand continues to be released inadequately, market supply and demand contradictions continue to expand, restricting the price center of gravity to shift downward.
has entered the fourth quarter. In the fourth quarter, steel prices may overall show a trend of strong first and weak first, and the price center of gravity shifts downward. Specific analysis of the drivers and the impact of drivers on prices:
Demand: Demand may increase first and then decrease support the price first and then restrict
Demand is the most critical factor affecting the later price trend. It is currently the peak season of traditional demand. Downstream terminals and construction sites are rushing to work, and demand may be released slightly, which has a certain degree of steel support for prices. Then it entered mid-to-late November. Against the backdrop of slowing economic growth at home and abroad, as the weather turns colder, demand may weaken, and price support also weakens. Specifically, the main driving force for demand this year is infrastructure. According to data from the National Bureau of Statistics, the growth rate of investment in infrastructure from January to August was 8.4%. The focus of national regulation is on fund issuance. In order to support infrastructure investment, the issuance and use progress of the 3.45 trillion yuan special bonds issued this year have been basically issued before the end of June and basically used before the end of August. Recently, the State Council has deployed a package of policy measures to stabilize the economy. The corresponding incremental policy tools are more than 500 billion yuan of new special bonds, two batches of policy financial tools with a total of 300 billion yuan, and 800 billion yuan of policy banks with a total of quotas for credit increase. With the expectation of continuous efforts in infrastructure support policies, the growth rate of infrastructure investment may further accelerate in the later period. These will orderly ensure that large-scale projects are implemented, driving a slight recovery in demand, and the steel used for infrastructure is showing an increase trend.
In terms of real estate, the real estate industry continues to be weak this year. According to data from the National Bureau of Statistics, the area of newly started houses fell by 37.2% from January to August. Steel used in real estate shows a downward trend. However, the recent implementation of the "protecting and subsidizing" policy in various places has made up for the gap in the demand for real estate steel to a certain extent. For example, companies related to the relevant regional companies of Evergrande Group must resume work in full before September 30 and do their best to do a good job in resuming work and production.
Overall, from October to mid-to-late November, downstream construction sites may rush to work in a concentrated manner, and demand is expected to rebound slightly. Then as the weather turns colder, market demand will weaken. Demand will increase first and then decrease in the fourth quarter, and support first and then restrict the price.
Supply: The supply may be stable and small and medium-sized decreases, which will restrict or slow down the price
is about to enter the heating season. The overall start-up load of steel mills may drop slightly, and the supply may be stable and small and medium-sized decreases, which will weaken slightly. It is understood that the overall profit of steel mills has shown a downward trend in the recent past, and the gross profit of hot coils and rebar has dropped from 200-300 yuan/ton in the early stage to 30-50 yuan/ton in the recent past. The decline in corporate profits restricts corporate production enthusiasm, and coupled with the heating season, the overall construction load of steel mills may drop slightly. Therefore, the output of steel mills may decline slightly in the later period, which will restrict or slow down prices.However, it should be noted that due to the fact that the output of steel mills has been affected to a certain extent in the previous few months, some steel mills are still more enthusiastic about starting construction in the traditional peak season, so the overall supply decline may not be large. According to the comprehensive comparison of
, short-term supply may decline slightly in a small and medium-sized manner, while demand has rebounded slightly, and the supply and demand contradictions are eased, which supports prices. However, due to the small amount of changes in supply and demand, supply and demand may still be the main game, and there is limited room for price to become stronger. Entering mid-to-late November, as demand weakens, supply and demand contradictions may increase, which may restrict prices.
Cost: the supply and demand of raw materials are weak, and the support for price is weakened
In the later stage, the construction load of some steel mills may be stable and small and medium-sized in the heating season, and the demand for raw materials may be stable and medium-sized in the demand for raw materials may be stable and medium-sized in the heating season. At the same time, most upstream coking plants are on the verge of profit and loss, and their production enthusiasm is not high. The supply and demand of raw materials ore and coke are both weak. The market is mainly waiting and watching. Prices may fluctuate overall, and support for steel prices may weaken.
Market mentality: Merchants are cautious about the future market mentality and low inventory operations
11 Federal Reserve will enter the rate hike again window period, and the global capital market liquidity shows a further tightening trend. Against the background of slowing economic growth at home and abroad, the market is generally cautious about the future market mentality and is mainly wait-and-see, and keeps low inventory operations. The enthusiasm for buying goods is average, which may be difficult to support prices.
Overall, steel prices in the fourth quarter may show a strong overall fluctuation and then a downward trend. From October to mid-to-late November, with the continued implementation of national policies and the rapid construction period of construction sites, demand is expected to rebound slightly. At the same time, due to the decline in profits, steel mill production may drop slightly in the later stage, and supply will decline steadily. The supply and demand contradiction will ease, and there will be support for prices. Prices may fluctuate overall. Due to the limited range of changes in supply and demand, the market supply and demand are still mainly in the game, and the price increase space may be limited. After mid-to-late November, as the weather turns colder, and under the background of slowing domestic and international economic growth, demand will weaken, market supply and demand contradictions may increase, and prices may fluctuate and fall.
This article is from Zhuochuang Information
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