SMM News: since July, the overall strong operation of steel. Under the optimistic expectation of the market for downstream consumption after the rainy season, steel transactions fell and began to rise again, and speculative demand increased compared with the previous period. Some parts of the south began to produce plums, and rigid demand also showed signs of starting.
From the supply side, Huatai futures researcher Shen Yonggang told Futures Daily that steel production has bottomed out and the possibility of a sharp decline is very low, while the rise in steel prices has begun to stimulate short-process resumption of production. With the gradual start of consumption in the peak season in August, the further expansion of prices and profits will inevitably lead to an increase in steel production. According to the analysis of steel production data in June, China plays a decisive role in the global steel recovery. Although overseas steel supply is expected to gradually recover in the future, domestic steel still plays an important role in global steel.
From the demand side, Shen Yonggang believes that steel consumption has also basically bottomed out, overall consumption resilience still exists, and there is an overall preference for real estate, infrastructure and manufacturing data in June. As of last week, cement operating rates had also begun to stabilize and rebound. At present, the plum rainy season has gradually ended, the impact of the high temperature weather is limited, the spare power to catch up with work still exists, and the peak consumption season will begin, and under the premise of sufficient funds in the market as a whole in the third quarter, consumption is still expected, and is relatively optimistic about the demand for steel.
In terms of inventory, in Shen Yonggang's view, as it is still in the off-season of consumption, inventory continues to accumulate, but the extent of accumulation has slowed down compared with the beginning of the month, and the market has tolerance for the accumulation of stocks in the off-season, pinning more hopes on the elimination of stocks in the peak season. Although this year, due to the epidemic, the overall inventory of steel is on the high side, but judging from the situation in the second quarter, once the peak season consumption is approaching, the speed of elimination is also much faster than expected, so although the current inventory forms pressure on the rise in prices, it will not form resistance to the improvement of the structure of steel supply and demand. Taking into account the expectation of the late steel peak season, the improvement of supply and demand structure, steel inventory will usher in a new wave of demise, and inventory improvement will inevitably lead to a rapid rise in prices, thus forming a benign production and marketing pattern.
"August, as the start-up period of the traditional peak season of steel consumption, superimposes this year's loose liquidity and economic recovery demand. It is expected that the supply and demand situation will gradually improve compared with the current situation, inventories will gradually be eliminated, and prices still have room to rise." Shen Yonggang said.
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