The push up at the end of August made the market sentiment soar. Following the enthusiasm of the end of July, all companies were optimistic about the demand for "gold nine silver ten" again. The price rise at the beginning of September made the merchants actively stock up, which made the best footnote to the demand in September. The higher demand on a year-on-year basis and the higher demand on a ring basis did not meet everyone's expectations. Capital and confidence set a tone higher than the demand level in April and May for the "golden nine silver ten", which also foreshadowed the current dilemma of the steel market. The situation of high output and high inventory remains unchanged. Normalized demand is far from supporting the sharp rise in steel prices. "Gold Nine" has become a legend, and "Silver Ten" still needs to be cautious.
Policy support, still need to sing opera
The year 2020 is a special year, with frequent macro policies, fiscal and monetary policies, which have been promoted in turn, and environmental protection policies have temporarily reduced the intervention in the steel industry. Throughout the world, economic stimulus policies are frequent, liquidity flooding drives up asset prices, and steel prices move up as the level of commodity prices moves up. However, global supply decreases at a slower rate than demand, maintaining the basic pattern of tight supply and tight demand on the whole.
Capital construction is the only major task, real estate is still difficult to open up, and later funds are still the focus
The worse the economic situation is, the greater the need for infrastructure construction to "work hard and quickly". The real estate industry is constrained by global geopolitical policies and economic measures, and dare not open up aggressively. At this stage, capital is tight for infrastructure construction, and it is difficult to raise funds for construction in progress and continued construction in the later stage, which may still last for a long time. The overall asset liability ratio of the real estate industry is high, and uncertain macro risks can only promote passive stabilization of house prices, reduce the debt ratio of the real estate industry, and also reduce the enthusiasm of the real estate industry to acquire land and start construction to some extent. The real estate industry will not open up. I'm afraid that the one-man show of infrastructure alone is not exciting.
China has become a high price area for steel, and overseas resources have impacted the domestic market
China is a traditional large steel producer and consumer. For a long time, China has been the largest steel exporter in the world. But in 2020, China will become a net steel importer for the first time in 11 years. The domestic economy took the lead in getting rid of the impact of public health events and regained its momentum of growth. However, overseas supply decreased less, but demand shrank sharply. Overseas steel mills also saw the current situation of high steel prices in China and actively increased their exports to China.
High output, difficult to unload
Whether for the purpose of maintaining growth or for the needs of the enterprise's own development, the steel output this year has been maintained at a high level. At present, long process enterprises make little profit, and short process enterprises have no plans to significantly reduce production at the edge of the break even line. According to the current development trend, the steel output remains at a high level for a long time. Historically, the steel has almost been destacked in the same period of previous years. Due to the impact of special public health events, the steel inventory is still at a high level compared with the same period of previous years, and the destocking speed is not as fast as expected.
The demand is at a high level year on year and month on month, but not as high as everyone expected
At this stage, the turnover of building materials of 237 steel traders monitored by China's Iron and Steel Network is at a high level, and the apparent consumption has also increased year on year and month on month, but it is still much lower than the annual high demand in April and May. In April and May, there was a superposition of acceleration factors. It is understandable that the demand exceeded expectations. However, September and October only got rid of the impact of the high temperature and rainy season in July and August, and the demand was only maintained at a normal level. The two rounds of inflation at the end of July and August are based on the logic that demand will explode. This expectation is not objective in itself and is unlikely to be fulfilled. In September, steel traders are generally suffering from the dull market. At the beginning of September, people believed that prices had risen and stocks had been accumulated actively. High priced resources are in hand, shipping, small compensation, no shipping, under the pressure of insufficient liquidity.
Non new business models such as direct delivery and term hedging of steel mills squeeze trade space
Drawing on the experience of advanced steel countries in Europe, the United States, Japan and South Korea, the direct supply proportion of steel mills will gradually approach 50%. The steel trade is the reservoir of steel trade, but the reservoir function is gradually weakening. Production directly enters into consumption, and the proportion of circulation links is becoming smaller and smaller. Only relying on trade circulation does not increase high value-added services such as logistics, warehousing, processing and finance, and the operation space of the business model relying solely on market quotations is becoming smaller and smaller. Some of the more advanced steel traders adopt the business model of combining the future with the present, which also makes it more difficult for steel traders who only do steel trade to operate. The business model of combining the future with the present can earn money in the market both up and down, but simply doing steel trade can only wait for the price rise to bring income, and the profit mode is slightly single.
summary
The output and inventory maintain a double high pattern. It is difficult to reduce the output in the short term, and the inventory is slowly reduced. The "silver ten" probability rate is just a normalized demand level, and it is hard to realize the expectation of price rise at present. The iron and steel industry has entered a relatively loose stage of supply and demand. It is not realistic to expect changes in supply and demand to form a larger profit space. It needs to operate cautiously and deepen services in order to obtain better returns.