Steel market pressure and support

Pressure: Domestic demand peaking, liquidity and risk appetite falling
China’s economic recovery has weakened and the economy is under pressure to slow down. We need to make good use of the period when there is less pressure to maintain steady growth. In the second half of this year, we may focus on structural adjustment and building long-term growth drivers.

As the economic recovery slows, the peak of demands for Cold rolled Square Steel Tube after the pandemic has passed, and the demand intensity in the second half of the year will be weaker than that in the first half. Specifically, in the short term, construction entered the off-season, the demand for building materials turned seasonally weak, the medium-term infrastructure investment growth was weak, the leading indicators of real estate were not good, the superimposed policy continued to control, the real estate investment momentum was insufficient, and the steel demand in the Pre Galvanized Round Steel Pipe was not optimistic in the second half of the year; In the manufacturing industry, the growth rate of production and sales in the automobile, excavator and other industries will decline. In the second half of the year, the external demand will fall and the recovery of domestic demand will reach a high point. The expansion of steel demand in the manufacturing industry will slow down.
The quarterly meeting of the central bank suggests that it is necessary to strengthen the study and analysis of the domestic and international economic situation, strengthen the coordination of international macroeconomic policy, and emphasize the need to guard against external shocks, which may be related to the Fed’s beginning to discuss the exit of quantitative easing. Demand expectations of steel conduit are weakening, the shift in global monetary liquidity will weigh on risk appetite, and market participants are becoming cautious after previous rallies and busts.
Support: Steel mills earnings under pressure, supply contraction expectations remain
The current steel production cost is still high, the main raw material, iron ore prices a modest drop from the previous high, coke prices basic at their highs. steel prices a nearly twenty percent drop from the previous high, the main varieties of steel profits shrink, individual varieties losses, the cost of steel prices to support strong gradually.
In addition, under the background of carbon emission reduction, the domestic steel supply contraction is expected to remain. In the early stage, due to the rapid rise of commodity prices, the downstream cost pressure increased, and to a certain extent affected consumer prices, which was not conducive to the economic recovery to normal. The policy of carbon emission reduction and regulation of commodity prices did a balance, for the Steel Tube China
China steel tube manufacturers put forward to ensure supply and price stability. In the medium and long term, carbon peaking and carbon neutrality will eventually be an unavoidable issue for the steel industry.