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What is the reason for the sharp drop in steel prices in the peak season and the rise in the off-season?
【Time:2021-12-07 13:47】 【Traffic:

 October and November have always been the peak seasons for the construction of real estate and infrastructure projects. Steel consumption has increased, but steel prices have fallen sharply, with a decline of as much as 1200 yuan. In December, due to the cold weather in most parts of the north, the construction site was affected and the steel consumption was reduced. What makes people wonder is that steel prices got out of the rising market last week. What are the reasons for the sharp drop in steel prices in the peak season and the rise in the off-season?

According to the data of the National Bureau of statistics, the domestic crude steel output in October was 71.58 million tons, a year-on-year decrease of 23.3%; The average daily output of crude steel is 2.309 million tons, lower than the level of the same period in 2017 in the supply side reform. In winter, Tangshan, Handan and other major iron and steel producing areas in the north have strengthened the prevention and control of air pollution, the staggered peak production of iron and steel enterprises has increased, and the iron and steel output has continued to decline.
Tangshan, a big iron and steel city, has started level II emergency response for heavily polluted weather since 18:00 on December 3, 2021, which is expected to last until 12:00 on December 10. The specific lifting time will be notified separately.
In mid November, Handan issued the production regulation plan for key industries from November 18 to December 31, requiring iron and steel enterprises to ensure the completion of the task of reducing crude steel output in the first stage in accordance with the notice on printing and distributing the work plan for staggered peak production of iron and steel industry in Hebei Province in 2021-2022 heating season.
In addition, domestic steel social inventory is also declining. By the end of November, the total steel inventory in the steel market of large and medium-sized cities in China was 10.62 million tons, a decrease of 370000 tons compared with the previous week, of which the total rebar inventory was 4.76 million tons, a decrease of 280000 tons compared with the previous week, a decrease of 6%, and the steel inventory decreased for seven consecutive weeks. Without a significant increase in demand, steel supply and inventory have remained at a low level over the years.
Recently, the state has released a series of macro positive news. On December 4, when meeting with georgiyeva, President of the International Monetary Fund, Premier Li Keqiang said: China will continue to coordinate epidemic prevention and control and economic and social development, implement stable macro policies and strengthen pertinence and effectiveness. We will continue to implement a prudent monetary policy, maintain reasonable and sufficient liquidity, formulate policies around the needs of market players, reduce reserve requirements in due time, and increase support for the real economy, especially small, medium-sized and micro enterprises, so as to ensure the stable and healthy operation of the economy.
Over the weekend, the central bank and the CSRC also said: the spillover impact of Evergrande group's risk events on the stable operation of the capital market is controllable. On the premise of maintaining the effective play of the market financing function, the CSRC supports the reasonable and normal financing of real estate enterprises and promotes the stable development of the capital market and the real estate market.
This series of heavy benefits stimulated the steel price to continue to rise over the weekend. On December 4, the price of ordinary square billet in Tangshan increased by 30 to 4320 yuan / ton. On Saturday and Sunday, the growth of deformed steel bar, hot coil, medium and heavy plate, profile, steel pipe and special steel in most domestic steel markets was between 50 and 80 yuan, and the phenomenon of not light in the off-season of steel market appeared again.
At the end of 2021, we should pay attention to the impact of these two aspects on the trend of steel price: first, near the end of the year, the capital in the steel market will be very tight, not only the banks are strict in lending, but also the collection pressure at the end of the year will make the funds of steel traders stretched, which will put pressure on the rise of steel price; Second, the opening time of the Beijing Olympic Games is getting closer and closer. The production restriction of the northern steel plant will reduce the supply of the steel market to a certain extent.
ADD:Liaocheng Shandong China
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