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Market participants: the performance of raw materials in the steel market in the second half of the year may still be better than that of mature materials
Jul 2,2020 08:38CST
Source:Futures daily
The content below was translated by Tencent automatically for reference.

SMM Network News: June 30th, held by Xinhu Futures, etc., the "Black Gold Market Prospect for the second half of 2020" was carried out online. At present, the global economy is gradually recovering, but the overall overseas epidemic is still spreading. against this background, participants believe that the overseas epidemic has not shown an inflection point, and the global economic recovery may be slower than expected. However, the performance of domestic infrastructure, real estate and other industries is bright, the steel market demand support is stable in the second half of the year, and the price is expected to be strong again.

Li Mingyu, a senior macro analyst at Xinhu Futures, said that the impact of the epidemic on the global economy is mainly reflected in the following aspects: first, production stagnates and demand weakens sharply; second, the private economy suffers a heavy blow, which is finally transmitted to enterprise employees, resulting in a reduction in residents' disposable income and higher unemployment rate; third, the collapse of the transnational industrial chain, foreign demand and foreign investment fell sharply; Fourth, the complication and long-term nature of the epidemic will depress expectations in the future, and private investment will be weak.

"while money is being put in, countries have increased fiscal expenditure one after another, and it has become common for government departments to widen leverage." Li Mingyu said that at the same time, the epidemic may reduce the total working hours of the global labor force by 6.7% in the second quarter of 2020, while the high unemployment rate may worsen in the second half of the year.

"although economic data from countries around the world are beginning to repair, demand remains weak." Li Mingyu believes that at present, overseas economies are facing many problems, and the out-of-sync pace of epidemic situations in various countries around the world has led to a slow pace of overall economic recovery. The low interest rates caused by the new round of quantitative easing policy adopted by the central banks of developed countries, represented by the Federal Reserve, and low global demand have led to the malaise of production and operation, and the prices of large categories of assets, led by industrial products, have generally fallen.

For the steel market in the second half of the year, Zhang Lei, dean of Shanghai Zhuo Steel chain Black Research Institute, said that the newly released PMI index of China's iron and steel industry once again fell below the line of rise and fall, especially the sub-index of new orders for steel enterprises fell significantly to 46.4, indicating that the current demand side has declined due to the arrival of the rainy and high temperature season in the south. However, the production profits of steel enterprises are still considerable, and some of the new replacement capacity will be put into production one after another. Driven by the phased strong supply and weak demand, the steel market may enter a certain weak adjustment period.

Zhang Lei believes that affected by the epidemic, both supply and demand at home and abroad have been suppressed to varying degrees, and governments of various countries have also introduced various measures to protect the economy, which makes the liquidity of the whole society very loose and brings some bottom support to commodities. In addition, the outstanding performance of the domestic infrastructure industry, the substantial recovery of the real estate industry and the overall recovery of related construction machinery, automobile, shipbuilding, home appliances and other industries have brought relatively stable support to the steel market demand in the second half of the year.

Based on this, Zhang Lei believes that after the full adjustment of the market from July to August, if the market inventory pressure is small, there is a greater probability that the market will again have a strong pattern of supply and demand and strong prices in the second half of the year, among which the performance of the raw material market may still be stronger than that of the finished wood market.

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