Looking back at the steel market in February, as of February 28, out of a small rebound after falling back and then rebound of the operating situation, steel composite price index fell 48 points, thread and wire prices fell 53 and 49 points, medium and thick plate, hot rolled and cold rolled prices fell 17, 54 and 42 points, iron ore prices fell 15 dollars, scrap steel prices fell 12 points, iron ore prices fell 15 dollars, scrap steel prices fell 12 points. Coke prices fell 212 points, a bit weaker than expected. Looking forward to the steel market in March, as the temperature rises, demand continues to be released, and the more fully adjusted disk is expected to lead the spot price of steel and the price of raw fuel together to form a resonance shock rebound.
Bearish sentiment in March has been better released to a certain extent, which is conducive to the rebound of steel prices. According to the observation of the small and medium-sized enterprise Development index released by the Association of Small and medium-sized Enterprises, most sub-indicators and sub-industry indicators have picked up slightly, from the perspective of credit, liquidity has also improved, and the enthusiasm of residents and enterprises to borrow has increased. Up to now, the total amount of special refinancing bonds disclosed nationwide has reached 1,441,151 billion yuan. In addition, according to statistics on infrastructure funding sources, the cumulative net financing of special bonds in the first eight weeks of this year was 464.9 billion yuan (5.7 billion yuan in the same period last year), a significant increase year-on-year. And the macro policy is still strengthening the effect, such as the asymmetric interest rate cut after the reduction of the reserve ratio, and vigorously promote equipment renewal and old for new, and so on. According to the 5951 data surveyed by Steel Union, enterprises' expectations for the overall business situation in 2024 are relatively weak, and the proportion of those who are not optimistic has risen by 6 percentage points, while those who are optimistic have fallen by 35 percentage points. More than 40% of the enterprises are tight on capital, a slight increase from last year; Although 70.5% of the surveyed enterprises with stable or growing orders in the first quarter, there was a year-on-year decline of 8 percentage points, and the proportion of enterprises with declining orders increased by 14 percentage points. These negative data, as well as some enterprises with tight funds, the impact of rain and snow on demand, high inventories of individual varieties in local areas, and the price of raw fuel correction, etc. To a certain extent, it has been cashed in the future spot market price trend.
March may not see the same negative events as last year's Silicon Valley banks, as these negative events in February and at the latest to early March have been exhausted, the bearish sentiment of March trading should be washed away by the bottoming out of demand, especially after the country's continued favorable policy release, will be further enhanced (must be better than the same period last year). The mood should be certain to get better. On the 28th, the comprehensive steel price was 288 yuan lower than the same period last year, which laid a good foundation for the steel price shock rebound.
The arrival of the fundamental inflection point of steel in early March is conducive to boosting the rebound of steel prices. From the perspective of the BDI, a leading indicator of the global economy and trade, the rebound from 1,308 points on January 17 to a high of 2,041 on February 28 suggests that global aggregate demand will continue to improve in the coming period (which should cover the whole of March). In March, as the weather across the country gets warmer, the construction season is gradually entering, and the demand for construction steel is gradually released. From the transaction of the construction materials investigated by the steel Union, the size of the sample on January 18 of the lunar calendar was 245,536 tons and 10664 tons, which was not much different from the 253,169 tons and 100,510 tons in the same period last year, and the average daily turnover of 177,499 tons in the early 9 to 18 days after the Spring Festival was 178,753 tons, an increase of 19.3% over the same period last year. From the 10094 construction site data of 100 years of construction research, in terms of the resumption of work, the national construction site resumed work in the next week after the Spring Festival, an increase of 1.5 percentage points year-on-year, but the labor rate fell 5.2 percentage points year-on-year. In terms of real estate, from January 1 to February 25 this year, the transaction area of new homes in 30 large and medium-sized cities fell by 43% year-on-year, and the transaction area of second-hand homes in 21 large and medium-sized cities increased by 18% year-on-year (of which the first-tier cities increased by 25%).
Micro-observation, in January this year, China State Construction, China Chemical, China MCC, China Power Construction, new signings increased by 13%, 53%, -4%, 15% respectively. Observing manufacturing steel, the global manufacturing PMI in January returned to the level of 50 for the first time in 17 months, and China's manufacturing PMI production index in January was in an expansion trend, and the demand for raw fuel was increasing. According to the research situation of Steel Union, the daily consumption of raw materials of steel structure, machinery and household appliances sample enterprises in March increased by 47.09%, 8.29% and 12.19% respectively from February. According to another survey, automobile production may reach 2.4 million units in March, a significant increase in the quarter, and the demand for steel has risen significantly. On the other hand, because the current steel mills still have about 75% of the enterprises in a state of loss, even if by March under the influence of the current decline in the price of raw fuel, some enterprises may be better, in any case, the week of 22, 247 steel mills average daily output of 2,235,200 tons of hot metal, a decrease of 105,800 tons year-on-year. The average daily production of molten iron in March last year increased by 80,000 tons to 2.38 million tons compared with February, and even if the output of molten iron in March this year has increased, it is estimated that it may not be able to increase by 80,000 tons per day. From the supply and demand balance of the reference index inventory to observe, whether it is the Spring Festival holiday or two weeks after the holiday, the absolute amount of inventory is slightly lower than the same period last year. Therefore, it is estimated that the latest third week after the festival or see the peak inventory, that is, the inventory turning point in early March, the inventory peak is slightly higher than the level of last year, but the speed of the latter may be slightly faster than the same period in the lunar calendar last year.The price of raw fuel, which has experienced more adequate adjustment, may rebound in resonance with steel prices under the influence of increased demand. Since the beginning of this year, coke prices fell 402 yuan, iron ore prices also fell 23 dollars, from the average price point of view, February coke composite price index fell 97 yuan, iron ore fell 10 dollars, iron ore 2405 contract price fell to 865, in the 0.382 decline in the gold line to be supported, unless steel prices continue to fall to break the previous low, Otherwise, short-term iron ore should have some support near this position, and of course, it does not rule out adjusting to 840 or even 825. In March, with the release of steel demand, the supply level of steel mills with repaired profits will be slightly increased, thereby driving the increase in demand for raw fuel, and the price of raw fuel will also have the momentum to rebound, so that it is easy to form a resonance rebound of the interaction of raw fuel prices and steel prices.
In short, the steel market in March, the gradual release of incremental demand, steel inventory ushered in a turning point under the influence of the gradual improvement of the fundamentals, and with the gradual release of the effectiveness of the policy of seeking progress in the stability of the economy, the mood will also be repaired to a certain extent, not pessimistic in the short term, cautiously optimistic in the future. Of course, we must also beware of the demand release affected by weather and policies less than expected, but also pay attention to whether the release of steel production exceeds expectations, resulting in unexpected pressure risks. From the operational point of view, the combination of multiple markets and flexible to establish a certain inventory, if the inventory is relatively large, flexible replacement, reasonable layout, reduce costs. Steel mills with profits should make full efforts to produce, and steel mills without profits should actively adjust the output structure to turn losses.
