"The average daily output of crude steel has increased again, this time breaking the highest point of nearly 10 years!" On June 23, the China Iron and Steel Industry Association released the key statistics of the production of steel enterprises in mid-June 2020; Once the average daily crude steel output data comes out, it really makes people feel tight. As steel demand gradually enters the traditional off-season, production has risen at an alarming rate. What impact will this have on the later steel price trend?
According to data from the China Iron and Steel Industry Association, in mid-June 2020, the key statistics were that iron and steel enterprises produced a total of 214.23 million tons of crude steel and 20.7577 million tons of steel. The average daily output of crude steel was 2.142 million tons, an increase of 77,000 tons from the same period last year, an increase of 3.73%; compared with the previous high point, the average daily output of crude steel in mid-September 2019 was 2.105 million tons, an increase of 37,000 tons, an increase of 1.76%. , Set a new high of nearly ten years.
At the same time, as can be seen from the recent data, since the beginning of April, the average daily output of crude steel of key steel companies has increased significantly, and it has grown for the past eight consecutive days, with a cumulative increase of 315,000 tons, an increase of 17.24%. It can be seen that after the epidemic, the steel output has also increased sharply after the rapid recovery of steel demand.
Moreover, it can be seen from the blast furnace operating rate of the major steel enterprises monitored by the Lange Cloud Business Platform that the blast furnace operating rate has increased since late February. As of June 19, according to the monitoring data of Lange Cloud Business Platform, the blast furnace operating rate of major steel enterprises nationwide was 88, an increase of 0.6 percentage points from last week; an increase of 5.3 percentage points from 82.7 last year. And from the end of February to the present, there has been a decline of 0.4 percentage points on April 17 only, and there have been different degrees of growth at other times; from mid-February to the present, it has increased by 12.5 percentage points. The sharp increase in the blast furnace operating rate also heralded the increase in production, which will increase the supply and demand relationship in the later period.
Steel production is increasing substantially, while steel demand has gradually entered the traditional off-season. At present, there is constant rain in the south. According to statistics, the precipitation in most of Jiangnan and parts of northern China this year has more than doubled compared with the same period of the previous year. The continued heavy rain in the south has caused construction to be blocked and the rainy season will continue for some time. The high temperature weather in the northern region is also severe, which also has a certain impact on open-air construction, so the demand for steel has recently declined. Under the influence of climate, the superposition of demand brought about by the rush work has gradually disappeared in the early stage, and the steel demand in the later stage will further decline, which will aggravate the supply and demand relationship in the later stage.
The increase in production and the decline in demand are also reflected indirectly in recent inventory data. As of June 19, Lange Steel's social inventory of 29 key cities was 13.021 million tons, a decrease of 190,000 tons from the previous week, a decrease of 1.43%, and a slowdown of 1.08 percentage points from the previous week. Although there has been a "fourteen consecutive decline", a cumulative decrease of 10.106 million tons, a decrease of 43.7%; but it is still higher than the same period last year, 2.734 million tons, an increase of 26.83%. It can be seen from the data that the current rate of decline in inventories has slowed significantly, and the amount of inventories is still at a high level, which has put a certain pressure on the trend of steel prices in the later period.
It is worth noting that starting from June 14, 2019, the inventory has rebounded for nine consecutive weeks. Although this year's steel stocks are still declining, this does not mean that this year's demand is better than last year, but that this year's demand was delayed due to the impact of the new coronary pneumonia epidemic.
So, how will the price of steel go later? Wang Guoqing, director of the Lange Steel Research Center, said that under the effect of cost support, the possibility of a sharp correction of steel prices in the short term is unlikely. However, under the influence of factors such as the continuous increase in the blast furnace operating rate, the crude steel Nissan's record high, the floods in the south and the slight correction of iron ore prices, it is expected that the steel market price will show shock adjustment in the short term.