The trend of steel prices still depends on the domestic macro "face"
The National Bureau of Statistics announced the January China Consumer Price Index (CPI). The data showed that domestic CPI rose by 4.5% year-on-year due to the sharp increase in holiday factors and food prices in January, compared with 4.1% in December last year. The monthly price index continued to decline. The unexpected rise in the consumer price index has once again stranded the long-awaited easing policy and has also exacerbated the pessimism of steel investors.
Prices are high, optimistic expectations encounter Waterloo
Recently, with the improvement of US employment data and the easing of the European debt problem, the peripheral market has experienced a long-lost rebound. Affected by this, the domestic steel industry is also eager to move, and they are expecting domestic policies, especially real estate policies, to loosen. During this period, the central bank asked banks to meet the demand for first-time home purchase loans, and increased the market's expectation of real estate control policies or moderate relaxation; and the foreseeable demand for affordable housing also made some enterprises optimistic, and futures steel prices also appeared. Continued rebound.
However, the sudden price data has poured a cold water on this strong optimistic expectation: If the price remains high, then suddenly loosening the currency will make the effect of last year's tightening a blow, and the shadow of inflation once again hangs over the steel market. Therefore, we also believe that in the absence of sustained declines in domestic prices, overly optimistic expectations will not only be realized, but will be caused by the tragedy of steel prices continuing to fall after the 2011 Spring Festival.
Consumption is difficult to start, steel stocks continue to increase
Around the Spring Festival, affected by market optimism, steel prices fluctuated and rose as expected during the Spring Festival. Affected by this, traders have also accelerated the pace of hoarding steel. According to my steel network statistics, as of February 3, the national social stock of rebar was 7,426,800 tons, an increase of 767,400 tons.
After the Spring Festival, due to the delayed construction of the construction industry and the poor sales data of the real estate industry, the downstream steel consumption is difficult to start. In addition, most of the trading companies are worried about the recurrence of steel prices after the Spring Festival in 2011, and they are holding on to the currency, causing more steel mills to flow to the market. The passive increase in steel stocks in the spot market has further affected. The price of steel also caused the trend of spot steel prices to deviate.
Steel production is at the bottom, which is good for steel prices
Therefore, we also see that domestic steel production has remained at a low level under the premise of sluggish consumption. The data shows that the average daily production of crude steel in the country in late January is estimated at 1.673 million tons, which is still at a low level. Such steel output will not bring too much impact to the downstream market, and it is more favorable for the stabilization of steel prices.
We believe that under the premise that domestic steel production does not recover quickly, the excessively empty steel price is not enough, because all parties in the market are very rational and cautious; plus the current market conditions, domestic steel mills It is also a lot of money, and the space for steel prices to continue to fall is extremely limited.
On the whole, as the downstream demand for steel products has not yet been opened, the performance of the steel market is also cautious, and steel prices have remained in a narrow range. Moreover, as steel production is also at a low level, the space for steel prices to continue to fall will be first suppressed by the supply of the industry; on the other hand, despite the unexpected rise in prices in January, prices are rising due to holiday factors, and prices continue to rise. The foundation does not exist, so the market still expects monetary policy to loosen in February and February.
Thus, in the absence of a clear domestic macro policy, both steel and long-term both show restraint. We believe that in the long run, China's act of loosening the currency is always a high probability event; and the consumption of steel downstream will gradually come along with the gradual warming of the weather, and the spring of steel will come sooner or later. However, in the short term, as domestic policies have not been fully clarified, it is too early to expect that steel prices will rise sharply at this time.
Concerned about surprises
Label: steel price, steel market, face, bearish, trend
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