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In the short term, domestic steel prices may still have upward potential in a weak callback

Nov 24,2020  Steel Knowledge.

From the perspective of raw material supply, raw materials have risen sharply, strip steel and billet prices have risen sharply, and the market has risen to a certain extent. In terms of social inventory, the social inventory of steel billets was slightly accumulated last week, and most of the rolling mills stopped production and restricted production, and the demand for steel billets weakened. From this perspective, the output of factories has increased slightly, the accumulation of factories and warehouses is obvious, and the pressure on supply still exists. Steel prices are currently in a rational correction range, but due to supply-side pressure, there is still no lack of upside in the medium and long-term finished products.

Looking at the demand side, although the rush to construction period in the south has driven a certain demand growth, the large-scale temperature drop in the northern area has a greater impact on market transactions. At present, there is no lack of low acceptance of high-priced resources in the downstream, coupled with seasonal demand. The decline may have a continuous boost to market prices. Therefore, from the perspective of demand, this is a key factor for price correction in the short term, and it is also a major factor influencing whether prices can continue to rise in the market outlook.

From a comprehensive perspective, the price of domestic and foreign mines rose last week, the trading atmosphere was good, and the output performance was stable. The supply of coke has declined, the demand for steel products has generally performed well, and the raw materials are expected to have room for upside. News such as the deployment of the National Standing Committee to boost key consumption of bulk consumption, China's entry into the world's largest free trade zone, and positive foreign vaccines all boosted the financial market.

On the whole, the supply side is relatively loose with slight pressure; the demand side is facing the off-season situation in the medium and long term, and the macro news is frequently good news. In the short term, domestic steel prices may still have the possibility of rising in the weak callback. But the price hike is limited.

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