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Judging From The National PPI Data in September: The Steel Market is Hopeless In The Future

Oct 20,2020  Steel Knowledge.

On October 15, the National Bureau of Statistics released the national PPI (Factory Price Index of Industrial Producers) data for September. The ex-factory price of industrial producers fell by 2.1% year-on-year and rose by 0.1% month-on-month. In the first nine months of this year, factory prices for industrial producers dropped by 2.0% year-on-year. From the perspective of sub-item data, the increase in the ex-factory prices of ferrous metal smelting and rolling processing industries related to the steel industry and steel market dropped by 3.5 percentage points.

As an important macroeconomic indicator of price changes in industrial production in a certain period of time, PPI data represents the changing trend and range of ex-factory prices when industrial enterprise products are first sold. However, the deterioration of the PPI sub-item data in September has brought some pessimism to the market outlook to a certain extent, superimposing the current steel price from the slight increase after the "double festival" into a downward trend. It is expected that in the absence of major positive releases, The steel market will enter a shock adjustment phase in the future.

Currently, there are many uncertain factors affecting the trend of the steel market. Domestically, the new crown pneumonia epidemic may make a comeback in autumn and winter; downstream demand has never been released as expected; environmental protection and production restrictions have become stricter; friction between China and Australia has intensified, and the trend of imported iron ore is uncertain; my country's economic growth in the first three quarters has turned from negative to positive , The Fifth Plenary Session of the 19th Central Committee has brought strong expectations to the market; construction conditions in the lower reaches of the autumn and winter deteriorate. Internationally, the new crown pneumonia epidemic is still spreading; the US general election has increased the volatility of international financial markets. Affected by this, steel prices will show a “no hope for large rises, but also difficult for large falls” in the short term, and the market will mainly be adjusted by shocks.

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