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National Development and Reform Commission: the market expects the trend of steel prices to be stable and weak in July.

iconJul 7, 2020 11:47

SMM: according to a survey of the country's important steel wholesale market, the sales price expectation index and purchase price expectation index of the steel wholesale market in July were 43.8% and 50.9% respectively, down 12.6% and 3.3% respectively from the previous month, reflecting a cautious market mentality. Steel prices, especially sales price trends, are expected to weaken in July.

In July, the expected index of sales volume and inventory in the steel wholesale market were 46.9% and 57.1% respectively, down 7.0% and 17.4% respectively, and the score was above and below the 50% dividing line, reflecting that the situation of steel sales is expected to weaken, while inventory tends to increase accordingly.

In July, the expected index of unit cost of sales and the expected index of sales profit margin in the steel wholesale market were 51.3% and 41.2% respectively, down 1.1 and 9.8 percentage points from the previous month, reflecting that the expected cost of sales of dealers did not change much, but the sales price and profit were not very optimistic.

Seasonal factors have a greater impact on demand than expected, and the hindrance of steel destocking process is the main factor leading to the lack of confidence in steel prices in July. Since the beginning of June, there has been obviously more rain in China, especially in the south. By July 2, the Central Meteorological Observatory has issued a rainstorm warning for 31 consecutive days, which is rare in recent years, and the release of steel demand is inevitably affected. The rate of destocking slowed continuously and rose in late June. According to statistics, compared with June 17, the total inventory of steel increased by 379000 tons, of which the inventory of rebar increased by 325000 tons. At present, if the weather conditions do not improve significantly, the weak operation of the steel market in July is likely to be greater, but supported by the high cost of raw materials, the decline in steel prices is relatively limited.

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