From the steel industry PMI investigated and released by the steel Logistics Professional Committee of China iot, it was 48.2% in November 2023, up 2.6 percentage points from the previous month, ending the operation trend of about 45% for 3 consecutive months, showing that the steel industry has stabilized in the short term. Sub-index changes show that market demand has picked up. Steel production rebounded accordingly, raw material prices rose again, and steel prices rose in shock. It is expected that in December, as the weather further turns cold, the demand side will contract, the price of raw materials will decline, the high price of steel will fall, and the production of steel mills will decline again.
In November, the domestic steel market demand performance has picked up. A number of factors have supported the demand for steel, first, infrastructure, with the implementation of one trillion special national debt and the steady progress of the "three major projects", infrastructure continues to develop; Second, in terms of real estate, a new round of building protection work has been strengthened, and a series of measures have been introduced at the national level, especially financial institutions. Third, in terms of key industries, important steel industries such as automobiles and ships are operating well; Fourth, in terms of funds, RMB loans increased by 644.6 billion yuan in October, an increase of 831.2 billion yuan year-on-year. In October, the scale of social financing increased by 1.85 trillion yuan, 910.8 billion yuan more than the same period last year, the capital situation has improved compared with the previous period, and market trading has become more active. Combined, with the support of a number of positive factors, although November is the steel industry's traditional transition from the peak season to the off-season stage, but in November this year, the steel market demand picked up from the previous month, the new order index was 49.7%, up 4.7 percentage points from the previous month, three consecutive months of month-on-month rise. Terminal demand is basically stable operation, according to the monitoring of Shanghai terminal wire screw procurement data, in November, Shanghai terminal procurement fluctuated slightly, and transactions remained relatively stable.
In November, the price of raw materials, which had slowed down in the previous period, rose again, and the cost pressure of steel mills increased. Driven by a slight recovery in production and a stable recovery in raw material procurement, raw material price support has also been strengthened. The purchasing volume index was 46.2%, up 2.8 percentage points from the previous month. The purchase price index was 77%, up 17.7 percentage points from the previous month, and the index increased significantly. From the category point of view, iron ore prices strong upward, in November, steel demand to pick up production and iron ore demand rise, while the market speculation factor is strong, driving iron ore prices all the way up; The price of coke fell first and then rose, and the accident in Luliang in the middle of the month led to the stricter security inspection expectations of related enterprises, which affected the supply of coke to a certain extent, so the price rebounded in the second half of the month; Scrap prices benefited from the rise in lumber prices, market trading has increased, and prices have rebounded. Overall, the prices of major raw materials in the steel industry were on the rise in November, and the cost pressure of steel mills increased.
In November, under the dual role of rising demand and rising costs, steel prices shook up. Shanghai rebar price index shows that on November 2, the price was 3775 yuan/ton, the lowest value in the month, and then all the way up, to November 21, when it rose to the highest point in the month 4044 yuan/ton, the highest value in nearly half a year, and then fell slightly to 3998 yuan/ton, still at a high level. On the whole, the current steel prices are rising rapidly, but due to the rising cost of raw materials, the problem of meager profits of steel mills has not been significantly improved. Steel market demand is expected to contract in December. First of all, although 1 trillion special national debt injected a strong impetus for steel demand, as the weather further turns cold, the fundamentals of steel demand will further decline. Secondly, from January to October, real estate development investment and new housing construction area declined significantly, and in October, the real estate development boom index hit a new low. At present, the overall real estate market is still growing, indicating that the insurance policy has been well implemented this year, but the growth of the area for sale and the decline of the new construction area indicate that not only the downstream demand for real estate is blocked, but the future construction area will also be negatively affected, so the real estate short-term support for the steel industry is still not optimistic. It is worth noting that the Sino-US meeting in San Francisco went smoothly, the external pressure is expected to ease, although in the short term by the weather and other factors such as demand has fallen, but in the long run, the implementation of a series of measures to expand domestic demand, boost confidence, prevent risks, coupled with the improvement of the external environment, the internal power to strengthen the future steel demand still has a good foundation.
The price of raw materials fluctuated downward, and the high price of steel fell. At present, the high price of iron ore has been concerned by the relevant ministries, while the decline in demand has also made it difficult for the fundamentals to maintain high raw material prices, speculation is difficult to maintain, and the high price of raw materials in the later period is a high probability event. Due to the decline in demand and the weakening of cost support, steel prices are also difficult to maintain the current rapid upward momentum, and the subsequent high is expected to fall. The production end may decline again. In December, steel production will face multiple pressures. First, the recovery of demand in November and the rise in steel prices led to the recovery of steel production in December is difficult to continue to maintain. With the coming of winter, market demand will decline with the further cooling of the weather, and steel prices will also decline due to the decline in demand, and the supply side support is insufficient. Second, the arrival of heating season will restrict the production of steel mills. Third, the current iron ore prices are high, the cost pressure of enterprises is increasing, in the case of steel prices are expected to fall, the production willingness of enterprises is difficult to guarantee. Fourth, the current high inventory pressure also has a certain impact on production. Under the combined influence of many factors, the production end may decline again. Enterprises also have a certain preparation for the decline in production expectations, reducing inventories of raw materials, raw material inventory index was 42.5%, down 1.7 percentage points from the previous month.
