Steel prices have reached the bottom of recent years

After the Spring Festival, the steel market encountered the "five new countries" regulation of the property market, and the steel price rapidly declined. According to statistics, the Beijing Grade 3 earthquake-resistant large screw fell 280 yuan/ton, and the Shanghai Grade II giant screw fell 410 yuan/ton.

It passed February and March, and March fell to April. However, according to the online survey in April, 48% of the businesses selected “Stable to oscillate” and choose “Stabilized and Weak” to account for 35%. The "up" accounted for 17%, but the "rising growth" was actually zero. This shows that the mentality of the overall steel market is quite "disappearing."

The most basic ones that cause such a result are the following two aspects:

1. Slower buying rhythm. The main reason for the formation of "Jin Sanyin IV" is when the weather starts to spring and the climate warming construction site is concentrating on construction. However, this year's "cold spring" period lasts for a long time, the country's climate is not stable enough, and the northeast China has experienced a rare "spring war" for many years. There was rain “visiting”, the start of outdoor projects and delays in construction progress directly suppressed the release of demand. At the same time, the state has introduced the "five new countries", which has also depressed the expectations of businesses for the market outlook.

2. Supply pressure is not reduced. According to the statistics of the latest week's inventory statistics, the inventory of building materials totaled 1,278,300 tons, a decrease of 449,600 tons, a decrease of 3.40%, and an acceleration of decline. However, the steel price dropped by about 7% in the first quarter of this year, but the decrease in the import of major raw material varieties reached 11.8%, while the coke fell even more to 14.2%. The drop in raw materials was much greater than the spot decline, which led to a quarter-on-quarter profit improvement for the dominant steel mills, which further enabled the steel mills to still have a strong active production initiative, just as the statistics of the China Steel Association showed that the average daily output of crude steel in the country in early April. The estimated value was 2.124 million tons, a YoY increase of 2.5% from the previous quarter, an increase of 4.59% year-on-year, and the average daily output of crude steel remained at over 2 million tons. The stock of steel mills remained high and was dragged down by the drop in steel prices. Orders in the later period continued to decrease, and the difficulty in digesting steel stocks further increased.

Even though the pressure is high, the current steel price is already at the bottom of the recent years. Most steel mills have already turned into losses, causing the market to see less sentiment, and the terminal demand is on the eve of the May 1 holiday and there are signs of improvement. Once again, the selling price has been able to see the space, and considering comprehensively, it is expected to see a slight consolidation trend in the short term.