China Steel Market Analysis

At the beginning of August, the Politburo of the Central Committee held a meeting. The meeting pointed out that "guarantee supply and stabilize prices" and not engage in "movement-style" carbon reduction, which led to a loosening of market expectations for production restrictions. Quotations in the rebar market have fallen. Under the background of limited production, the output level of steel mills will also be significantly lower than in previous years. The margin of downstream demand has improved, and merchants are currently willing to panic selling goods. However, due to the lack of a clear release of demand, the market has insufficient motivation to increase prices. At present, it is still how the country promotes the guarantee of supply and price stability of bulk commodities.

Coated products:

1. The policy aspect has continued to monitor the prices of bulk commodities. The Politburo meeting proposed to correct the campaign-style “carbon reduction” and resolutely curb the blind development of the “two highs” projects, which led to the weakening of steel mills’ production restriction expectations and at the same time. Do a good job in ensuring the supply of bulk commodities and stabilizing prices.

2. The national economic data for July was lower than expected. Among them, a number of economic data such as fixed asset investment, infrastructure investment and real estate investment, which are closely related to the steel industry, fell across the board, which had a significant impact on market sentiment and funding.

3. Baosteel and other key steel companies' price policies for coating products remained flat in September, in line with the implementation of the national price stabilization policy.

The operating rate of the coating production line dropped slightly

　　 As of August 26, 42 sample steel mills across the country have conducted statistics. Among them, there were 118 galvanized sheet production lines, 11 of which were suspended or overhauled, and the operating rate was 87%, which was the same as at the end of last month; there were 82 color-coated sheet production lines, and 22 of them were suspended or overhauled, and the operating rate was 71%, which was a decrease from the previous month. 2%. The average daily output of galvanized sheets in the sample steel plants was 67,900 tons, a slight increase of 0.06 tons from the previous month; the average daily output of color-coated sheets was 26,800 tons, a slight increase of 0.02 million tons from the previous month.

　　Private steel mill prices have dropped across the board, steel companies' profits have shrunk slightly

　　 In September, the ex-factory prices of galvanized products from Baosteel, Anshan Iron and Steel, Benxi Iron and Steel continued to flatten, and the signal for maintaining stability was strong. It is reported that in September, the orders received by some steel mills were at least 50% off, and the ordering costs of merchants remained high and the supply was reduced.

　　 Private steel mills do not have much pressure on inventory, but the terminal demand is not good, and traders are not in the mood to stock up, so they can only choose the operation mode of price-for-volume, and the monthly decline generally reaches 150-200 yuan/ton. As of the end of the month, the profit of private galvanizing plants was around RMB 1,000-1200 per ton. Although profits have shrunk, they are still considerable.

　　 Coating inventory has declined moderately

　　 The market price of coated sheets fluctuated and dropped this month. However, affected by the weather and local public health events, the market demand performance was still relatively weak, and the progress of destocking of coated sheets was relatively slow. According to a survey conducted by China United Iron and Steel Network, as of August 25, the total galvanized coil inventory in major cities across the country was 1,259,800 tons, a month-on-month decrease of 21,900 tons; the color-coated coil inventory totaled 305,900 tons, a decrease of 4,600 tons from the previous month.