The medium-term rise of steel prices remains unchanged in May, or the risk of a callback due to poor downstream transmission
In April, the domestic black series continued its upward trend in March, and the trend of raw materials was stronger than that of finished products. Affected by this, the market expects that other regions outside the restricted production area will have strong momentum for resumption of production. Therefore, the increase in steel prices slowed down in the first half of April, and it only strengthened again after the introduction of a new production restriction policy in the Handan area in the second half of April. Iron ore rebounded significantly due to the high profits of steel mills, the expected production rebound of domestic and foreign steel mills and the impact of high discount factors. After the second half of the year, the growth rate has slowed down with the introduction of the new production restriction policy.
Looking forward to the domestic steel market in May, carbon neutrality and environmentally friendly production restrictions will still suppress the medium-term supply of steel, but in the short term, under the stimulus of high profits, there is a risk of a phased recovery. On the demand side, real estate and infrastructure data maintained resilience, but some leading indicators began to weaken; manufacturing investment began to stabilize in March, and there is a high probability that it will continue to strengthen in the later period. In the short term, the steel market faces the problem of poor price transmission. Therefore, the medium-term increase in steel prices will not change, but may face the risk of a callback.
In the mid-term, carbon neutrality and environmental protection production restrictions will still suppress the steel supply side. It is expected that the environmental protection production restriction policy will likely be extended to other regions in the later period. However, if there is no new production restriction policy in the short term, high profits may lead to a rebound in blast furnace output. On the contrary, if the policy is further increased, the supply may fall.
Regarding the performance of steel demand, on the one hand, the decline in building materials inventory in the past two weeks has begun to slow down, and apparent consumption has fallen for two consecutive weeks. As of the week of April 22, the apparent consumption of rebar was 4,296,200 tons. , The higher point dropped by 255,000 tons. At present, traders are still afraid of the height of the finished product, and from a seasonal perspective, the demand intensity will gradually weaken after entering May. In addition, the current supply level of rebar is still high, so it is necessary to pay attention to the phased inventory turning point. Will it come early.
On the other hand, at least in the first half of the year, exports of mechanical and electrical products will still maintain high growth. In the medium term, the improvement in domestic and foreign demand will boost investment in the manufacturing industry, which in turn will benefit sheet demand. However, in the short term, there is also the problem of poor price transmission to the downstream of the sheet material. With the implementation of the tariff policy and the waning of the export-grabbing effect, the export volume of sheet materials may decline in stages, and these factors will be negative for the short-term price of sheet materials.
On the whole, carbon neutrality and environmentally friendly production restrictions will still suppress the medium-term supply of steel. However, in the short term, due to the obvious recovery of long-process steel mill profits and the policy vacuum period, there is a risk of a phased rise in supply. The medium-term growth trend of the steel market will not change, but in May, under the background of weakening downstream demand intensity and poor price transmission, it faces the risk of a phased correction.
Raw material end
This round of iron ore price rebound is mainly due to the obvious recovery of profits of domestic and foreign steel mills to boost the production enthusiasm of steel mills and the high discount of disk surface repair. In addition, although the total port inventory and fine ore inventory have rebounded this year, the structural problems of port inventory are still prominent after April. The main reason is that steel mills are more inclined to High-grade mineral resources.
In the short term, the kinetic energy of rising ore prices still exists, but there are still hidden worries about the trend of ore prices in the medium term. One is that under the background of carbon neutrality, the long-term weakening of ore demand is expected to exist; the second is that high ore prices have stimulated the recovery of non-mainstream ore supply.