The steel market still has room to fall

The important condition for the normal operation of the iron and steel industry is the orderly flow of capital, materials (raw fuel and finished products) and personnel. If you can’t sell the finished product of galvanized steel pipe, you can’t get the money back, you can’t buy the fuel, and you can’t produce it again. And sales of finished goods if there is demand, still exists the problem in the near future. This kind of incentive demand creates explicit demand. It is understood that there are some private enterprises that rely on the rapid turnover of funds to maintain large-scale and efficient operation, as well as some state-owned enterprises with high debt ratio, their cash flow in the case of relatively smooth revenue and expenditure, generally maintain less than two months;

Some full payment orders and low debt ratio of the steel pipe suppliers are affected. While the other side of the sales part or even all stagnation, cash flow maintenance time is shortened. Therefore, in March different steel mills (including some traders) cash flow pressure will follow, the ideal price stability may be only the choice of temporary departure, the implementation of price promotion is the strategy. Recently, Shandong steel mill also actively reduced the settlement price of 150 yuan in February; there is also a steel mill in east China in 2-3 price policy that did not make adjustments. The impact of the public health emergency security events is huge, and emotion is panic at the beginning. The spot market have no deal appeared fundamentals pressure so, depends on the macro policy of good repair dynamics as well as demand season expected optimism about the future, at the same time, also affected by the futures disk game pricing of structural glass curtain wall..
But into march, people’s eyes will start to return to reality: on the one hand, the inventory will have at least two weeks of accumulation time, passively hit a new record (27 days of sample inventory of Shanghai steel union statistics has reached 37.16 million tons, 10.7 million tons higher than the peak in recent years);Second, the start of demand is estimated to late in the middle of last week, even if there is some demand release in the middle of last week, the strength is weaker than expected. Three supply is controlled to some extent, but 2 month production strength is not enough and production companies will continue to appear. Once people realize that the difference between reality and expectation of green house garden is more and more obvious, the early emotional optimism may start to return to the rational reality. If the price directly rises, the enterprise profit range increases, the production enthusiasm increases, which is not conducive to production reduction.