Aug 10,2022 Steel Knowledge.
Due to the continuous rise in the steel spot market in the last week, downstream users are also keeping a wait-and-see attitude, and most of them mainly purchase on-demand. By convention, every July and August are the time periods for the steel market to actively reduce inventories. The main factor is the shutdown of steel mills for maintenance. Since July this year, the continuous decline in steel inventories is also expected.
Some steel traders reported that since mid-July, the construction steel resources in the steel market have been relatively tight, and many steel mills have basically closed their direct supply at noon, which has indirectly led to a slight rise in the current steel price above 4,000 yuan/ton. Whether this situation can be maintained depends on the demand of the steel market.
We believe that the biggest focus of steel demand in the second half of the year is not the growth of infrastructure steel, nor the country's upcoming policy to reduce steel production capacity, but the increase in steel market demand brought about by the policy of "guaranteeing the delivery of buildings" to promote the resumption of construction sites. The good news in these three areas is slowly fermenting, which is also the driving force for the recent rebound in steel prices.
1. The policy of "guaranteing the delivery of buildings" in various places has accelerated, and the increase in steel demand is looming
The high-level meeting emphasized the need to stabilize the domestic real estate market, and proposed to consolidate the responsibilities of local governments to ensure the delivery of buildings, people's livelihood, and stability. Guaranteed handover is a booster for solving the current plight of the real estate industry, and is of great significance to stabilizing the real estate market and restoring confidence.
Since the second half of last year, most real estate developers have been facing huge financial pressure, resulting in many real estate not being delivered on time, which has brought trouble to home buyers. The most important thing is that potential home buyers have lost confidence in real estate developers, and the property market Into a vicious circle: consumers wait and see - the house cannot be sold - the developer has no money - the real estate cannot be handed over.
Recently, with the joint efforts of local governments, financial institutions and real estate companies, various funds have accelerated to support real estate developers. On the evening of July 29, Evergrande Group announced on its official website that as of now, there are 732 construction projects in the country, 579 projects have resumed work and have reached normal construction, and 126 projects are in the process of resuming construction; August 4 On the same day, Kaisa Group announced that it will fully resume work on the suspended buildings and strive to deliver the buildings on time.
Looking at the Evergrande Group alone, 732 construction projects have resumed work. The number of buildings guaranteed to be handed over nationwide should be a huge number. With the large number of resumption of construction projects, the demand for construction steel in the second half of the year will continue to increase for a long time, which will also form a strong support for the trend of steel prices after August.
2. The National Development and Reform Commission requires to seize the peak construction season in the third quarter and speed up the construction of major projects
The National Development and Reform Commission held the first meeting of the coordination mechanism for promoting effective investment in important projects. The meeting pointed out that my country's economy is in a critical window of stabilization and recovery, and the third quarter is crucial. Actively expanding effective investment is an important support for stabilizing the economy. Accelerating the construction of major projects is a major deployment that benefits both the current and the long-term.
The latest July construction activity index released by the National Bureau of Statistics was 59.2%, 2.6 percentage points higher than that in June. The domestic construction production activity has accelerated, indicating that the construction of infrastructure projects is accelerating, and the steel market demand has rebounded.
3. The steel production capacity reduction policy is about to be implemented, and the reduction in supply will form support for steel prices
A few days ago, He Wenbo, executive chairman of the China Iron and Steel Association, said: In the second half of the year, all iron and steel enterprises should insist on organizing production according to actual needs.
In the first half of the year, the National Development and Reform Commission has made arrangements. This year's domestic steel production capacity cannot be higher than last year. Some market analysts said that it is expected that this year's steel production capacity will be reduced by about 30 million tons. The downward trend of steel prices since the beginning of the month.
To sum up, last week, some coke enterprises proposed to raise the ex-factory price of coke by 200 yuan/ton in the first round, which was resisted by the large steel mills in the north and could not be implemented. Taking advantage of the epidemic in Ganqimao this week, Mongolian coking coal cannot be imported normally, and coke production enterprises will definitely increase again, and the probability of price increase is expected to be high.
Next, with the continuous injection of various funds into real estate enterprises, the pace of resumption of work and production in real estate will be further accelerated, which will also bring a large increase to the "Golden September Silver October" steel market.