Earnings of pipe suppliers fluctuated slightly

Spring infrastructure investment is expected to pick up
Following an executive meeting of the state council to reduce the low capital ratio of some infrastructure projects, the ministry of finance recently set a limit of 1 trillion yuan for some new special debt in 2020, accounting for 47% of the 2.15 trillion yuan in 2019, which is within the scope authorized by law. At the same time, local governments are required to implement the quota of special bonds into specific projects as soon as possible, and do a good job in the issuance and use of special bonds as early as possible, so as to ensure effective use of structural steel pipe early next year, to ensure the formation of physical workload, as early as possible to form an effective boost to the economy. It is expected that early next year will see the rapid issuance of new special bonds, which will accelerate the recovery of infrastructure investment in the spring.

The market began to accumulate but traders were less willing to store in the winter.
With the gradual smoothness of the north timber southward, the demand end of the construction steel gradually weakened such as mild steel tube, the market has changed from the previous “long strong board weak” to “long weak board strong”. According to the monitoring data of Lange steel cloud business platform, as of December 6, the steel social inventory counted by Lange steel net was 6.721 million tons, up 0.3% from last week and down 2.1% from the same period last year. Among them, building materials social inventory of 3.092 million tons, up 3.3% from last week;The social inventory of square steel pipe was 3.629 million tons, down 2.1% from last week.

Due to the pessimistic expectation that the off-season consumption will increase, the supply side may release under the superposition of high profits. Under the seasonal pressure, the steel social inventory may continue to accumulate. However, due to the high price and the concern about the failure of winter storage in the previous two years, the steel traders’ speculation intention on winter storage is still not high.
External demand remains weak, with full-year steel exports expected to be 64 million tons. Customs data show that in November, China’s steel exports were 4.575 million tons, down 207,000 tons from the previous month and down 14.0% year on year. From January to November, steel pipe suppliers exported 59.663 million tons of steel, down 6.5% year on year. Since the beginning of this year, the downward pressure on the global economy has increased, coupled with the increasing uncertainty of China-US trade friction, and the effects of last year’s trade friction in the steel industry, the steel export trade has been continuously dragged down. It is estimated that China’s steel export volume will be about 64 million tons in 2019, with a year-on-year decline of more than 7%.