Restocking or will boost steel prices

Affected by the impact of the macroeconomic performance and the arrival of the inventories, the track of steel prices in the fourth quarter may have rebounded after the first weak shocks, and the price recovery can continue around the Spring Festival.

Starting in mid-August, steel prices fell first, causing prices of raw materials in the industrial chain to gradually decline.

Judging from the performance of steel prices in the third quarter, the performance of macroeconomic data is deviating from the trend of steel prices. In the third quarter, major domestic macroeconomic data performed well. Among them, the growth rate of industrial added value above designated size increased from 8.9% in June to 9.7% in July, and the growth rate in August reached 10.4%. In September, the manufacturing PMI rose to 51.1%, which is a rebound for three consecutive months. . However, the unexpected economic growth did not bring real benefits to steel prices. After a short positive reaction, prices began to fall. The fact that steel prices have not consistently responded to economic performance is an important reason for the serious overcapacity in the steel industry. Since the phased rebound of steel prices in July resulted in production blowouts, this also constituted a significant suppression of late-stage price performance.

In the fourth quarter, the operation of steel prices was mainly affected and restricted by two factors. The first factor is the performance of the macro economy. According to the forecast of the relevant agencies on GDP and industrial added value, it is difficult for these two indicators to have a strong performance in the fourth quarter. The national policy focuses more on economic reforms and investment will be affected. Therefore, from the perspective of the overall macro environment and downstream investment demand, the lack of bright spots in the fourth quarter will affect the steel price negatively. The second factor is the arrival of the traditional gold restocking period. Looking at the changes in steel stocks over the years, there will be an inflection point in the inventory changes in the 4th quarter of each year, which means that from the previous drop, it will turn into an increase. The arrival of the time of restocking by the northern steel traders will make the fourth quarter the strongest period for steel prices in a year. On the other hand, the relationship between imported iron ore inventory and iron ore prices can also be verified. When the average inventory availability of imported iron ore increased, the price of ore rose and the price of steel increased; when the average inventory of imported iron ore decreased, the price of ore decreased and the price of steel decreased. Therefore, the period of gold restocking can benefit steel prices.

Judging from the current situation, the negative impact of investment weakening on steel prices can continue for some time. In the mid-late quarter of the fourth quarter, when stocks have an inflection point, they will expect to support and boost steel prices, so the track of steel prices in the fourth quarter After the weak shocks began to rise, the price recovery can continue to stay near the Spring Festival.