The steel market prices will gradually peak in the near future

The current domestic steel market prices and upstream cost prices both continue to rise, and effective demand continues to grow. Due to weather conditions, although social inventories have increased, the market mentality is relatively good; It can be said that the current conditions and operating environment of the steel market are basically good. So, will the domestic steel market prices continue to rise? The author believes that the current steel market prices are already at a relatively suitable level. Although there is still some upward momentum and magnitude, taking into account various unpredictable variables that may arise in the future, it is basically believed that the current round of steel price fluctuations and upward adjustments is coming to an end. In early August, the domestic steel market prices will gradually peak and enter a relatively stable operating range.

1、 The driving force for the current domestic steel market price increase still exists

1. The strong domestic demand continues to support the recovery of the steel market. At the end of the first quarter, the social inventory of major steel markets was relatively high, and the current social inventory of steel has been significantly reduced. The inventory of rebar decreased from 4.07 million tons at the end of March to 3.19 million tons at the end of June, and the inventory of sheet metal also decreased to varying degrees, indicating that the market demand in the second quarter was relatively strong. The strong market effective demand not only digested the current production, but also quickly digested the social inventory, creating basic conditions for the upward adjustment of steel market prices. At present, the overall situation of China's economy is stabilizing and improving. Industrial production is accelerating its recovery, and the decline in industrial profits is slowing down. According to statistics, in the first half of the year, the added value of industrial enterprises above designated size increased by 7.0% year-on-year (up 10.7% in June), with a growth rate 9.3 percentage points lower than the same period last year. The connection between industrial production and sales is good, with a sales rate of 97.2% for industrial products in the first half of the year. From January to May, industrial enterprises above designated size in China achieved a profit of 850.2 billion yuan, a year-on-year decrease of 22.9%, which is 14.4 percentage points lower than the decline in January and February. In addition, fixed assets investment grew rapidly. In the first half of the year, the whole society's fixed assets investment was 9132.1 billion yuan, up 33.5% year on year, 7.2 percentage points faster than the same period last year. Among them, urban fixed assets investment was 7809.8 billion yuan, up 33.6% (35.3% in June), 6.8 percentage points faster; Rural fixed assets investment was 1322.3 billion yuan, up 32.7%, 9.5 percentage points faster. With the improvement of the domestic economy, market demand has gradually rebounded, providing support for the rise in steel prices.

2. The rise in international market prices has created a favorable external environment for the domestic market. The current economic recovery in emerging markets will continue to increase demand for steel, while steel inventories in developed economies in Europe and America continue to decline. Downstream industries such as the real estate and automotive industries have begun to increase procurement and replenish inventory after bottoming out. The amplification of demand has led to a continued upward trend in international steel prices in recent times. This is the 11th consecutive week of price increase since the first week of May when prices shifted from decline to rise.