Overview: Looking back at the market in May, the price of industrial wire rods showed a volatile decline. The absolute price index of Mystic industrial wire rod closed at 5,400 points, down 71 points from the previous month, a month-on-month decrease of 1.3%. Specifically, under the influence of the epidemic blockade exceeding expectations, 5 Yuegang's industrial wire rods are running weak as a whole. After a good start after the 51st festival, they showed a unilateral decline. The demand for orders from the downstream side was lower than expected. The mentality has weakened. Looking forward to the market in June, I will analyze it from the following points.
1. The market price of industrial wire rods fell slightly in May
In May, the market price of industrial wire rods was weak as a whole. Among them, the national average price of hard wire was 5092 yuan/ton, the average price of cold heading steel was 5199 yuan/ton, and the average price of drawing wire was 4888 yuan/ton, down 180 yuan/ton from the end of last month, respectively. Down 187 yuan/ton and down 240 yuan/ton. This month, the prices of all varieties have declined, and the price difference of Puyou has not changed much. From the perspective of the north-south price difference, the price difference between South China and North China is 160 yuan/ton, and the price difference is still greatly repaired, and the price in the north has fallen sharply this month.
2. Supply increased slightly in May
The total output of major industrial wire rod manufacturers in May was 4.801 million tons, an increase of 273,000 tons or 6.03% over the previous month; the capacity utilization rate was 64.6%; the planned volume of steel mills in June was 4.686 million tons, a slight decrease from May, among which North China The output of steel mills increased more.
3. Slight decrease in inventory
As of the end of May, the total number of industrial wire rod varieties was 710,900 tons, a decrease of 66,700 tons or 8.6% from the previous month. Specifically, the social inventory continued to decrease in May, but the factory inventory accumulated a lot, and the overall inventory level was slightly higher. In previous years, due to the poor market trading atmosphere, traders took the initiative to obtain limited goods and mostly focused on shipments.
4. Manufacturing Purchasing Managers Index rebounded slightly
The official manufacturing PMI in May recorded 49.6, although lower than the threshold, but up 2.2 percentage points from the previous month. The production index was 49.7%, an increase of 5.3 percentage points from the previous month; the new orders index was 48.2%, an increase of 5.6 percentage points from the previous month; the raw material inventory index was 47.9%, an increase of 1.4 percentage points from the previous month; the employment index was 47.6%, an increase of 0.4 percentage points from the previous month; the supplier delivery time index was 44.1%, an increase of 6.9 percentage points from the previous month.
All sub-indices rebounded to varying degrees from the previous month, supporting the recovery of PMI. The PMI began to rebound after falling for two consecutive months, indicating that with the gradual emergence of a series of efficient coordination of epidemic prevention and control and economic and social development policies, the level of economic prosperity has improved compared with April. With the weakening of the impact of the epidemic and the accelerated implementation of relevant policies, the driving force of investment and consumption in the economy will gradually increase, and the PMI index in June is expected to stand above the line of prosperity and decline.
Looking forward to the June market, the supply side: At present, the output of steel mills remains at a high level, and the price rebound of steel mills is not strong. In terms of demand: In June, with the weakening of the impact of the epidemic and the rapid progress of resumption of work and production, demand is expected to rebound rapidly. From the cost side, the supply side of the charge in June is still tight, and the price is expected to still have a certain upward space, which has support for the cost side. Entering the June market, the strong expectations of the country's favorable policies continue to strengthen, which has continuously brought confidence to the steel market, especially the recent trend of electronic trading has clearly responded, but on the one hand, we must also consider the rainy season in June and the Fed's "interest rate hike + balance sheet reduction" for Influenced by the market, it is expected that the price of industrial wire rods will rise and fall in June, showing a slight increase as a whole.
