Shanghai construction steel prices: demand release far below expectations

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According to the latest market analysis provided by the well-known domestic steel spot trading platform "Nishimoto Shinkansen", the price of construction steel in Shanghai has continued to fall, with a weekly ton price drop of 230 yuan, the largest drop since the Spring Festival this year. Some mainstream steel mills in East China rarely launched the ex-factory price policy of "price reduction + discount". The release of demand is far lower than previously expected. Some traders who hold a large proportion of high-priced resources are estimated to be in a "floating deficit" situation. The market inventory has returned to the track of Masukura, and the bottoming process of the market may continue. 

According to the monitoring of the "Nishimoto Shinkansen", in the recent week, the price of construction steel in Shanghai has fallen continuously, with a weekly drop of 230 yuan per ton, the largest weekly drop in steel prices since the Spring Festival. At present, the ton price of high-quality grade 2 rebar in Shanghai is adjusted to around 3,950 yuan per ton; the price of high-quality grade 3 rebar has also been adjusted to 4,020 yuan per ton. Historically, May should have been the peak season for consumption in the steel market. In the past five years, there has been a pattern of "three ups, one level and one down". But the steel market in May of this year is estimated to be difficult to improve.

According to relevant market analysts, following the continuous decline in sales in April, the demand for construction steel in Shanghai in May failed to bring any support to the market, and with the overall decline in steel prices this week, demand fell to the bottom. , not only the intermediate demand has shrunk sharply, but the terminal demand has also consciously slowed down the pace of procurement. After 6 consecutive weeks of lightening down since the beginning of the year, Shanghai's construction steel inventory has returned to the track of increasing warehouses. The relevant inventory is still in a high level of consolidation, and a considerable proportion of the inventory structure is high-cost resources after March. It also means that some businesses have fallen into a "floating loss" situation.

According to analysis, the "cooling" of the market has had an impact on steel mills. Baosteel's steel prices in June were all "flat"; the latest round of ex-factory price policy of Shagang in East China is a rare "300 yuan per ton drop and then make up 300 yuan". The price of steel rod and wire has also been reduced across the board. But even so, there is still "upside down space" between the ex-factory price and the market price of steel mills, and the game between dealers and steel mills will continue. At present, the spot price of construction steel is close to the cost range of some steel mills. Under the pressure of cost pressure, some small and medium-sized steel mills will show signs of reducing production. As for the steel raw material market, although the decline was much slower than that of spot steel prices, transactions were generally sluggish, and both supply and demand sides were mainly on the sidelines. At present, the iron ore quotations of port traders are chaotic, and there are many signs of selling goods.

Market participants predict that the law of "buying up and not buying down" will be fully reflected in the next steel market. Whether it is terminal demand or intermediate demand, it will be in a wait-and-see state; the recent sales of steel mills are hardly optimistic. The weak trend of 2019-2018 is maintained, and the price of raw materials will also have room to "make up for the decline"; after the "ton price mark" of 4,000 yuan for secondary high-quality rebar was easily broken, some traders have been "panic and bearish" mentality, there is Further sell-off momentum.