Steel market revives or stays until March

As of February 21, Tangshan's major warehouses and ports with the same caliber statistics of steel billet stocks were 1.768 million tons, an increase of 149,800 tons last week, and a new record high. On January 18th, social inventory of the five major steel products in the major markets of the country rose to 14.344 million tons, an increase of 329,000 tons from the previous week, of which rebar stocks increased the most and continued to increase for eight weeks.

At the same time, crude steel production was operating at a high level in early February and supply pressure increased. According to data from the China Iron and Steel Association, the average daily crude steel production in the country in February 2013 is estimated at 1,988.9 thousand tons, almost equaling the 2 million tons mark. Among them, the average daily output of crude steel for key large and medium-sized enterprises was 1,701,400 tons, which was the highest level in history, and was only lower than the 171.23 tons in late February 2011.

In addition, the recent performance of electronic trading and the stock market is not optimistic, the spot market has entered the adjustment period, building materials in the case of poor fundamentals can only follow. Wang Jinhua analyzed that the regulation of real estate has not been relaxed, and iron ore prices are also subject to falling risks. Whether it is from a macro perspective or a fundamental perspective, building materials can only be selected as a flat plate.

Zheng Lingfeng, my steel network analyst, described the current steel market as “helpless, awkward, and wait-and-see”. He said that at the moment, "Inventories are all up, everyone's heart is a little bit uneasy. In the short term, demand will not rise and it is expected to last until mid-March."

A few days after the festival, the market has not yet entered the sales state. Some markets have been forced to rise as steel prices have risen. Under the dual constraints of the weather and demand, steel prices have been affected. At present, the market price is still hanging upside down. Some market participants said that with the market confidence is frustrated, it is expected that the building materials market will return to consolidation in recent days.

However, some people think that the overall outlook for late February is still bullish, “After all, the factors of rising costs, steel mills will always digest through price increases. Moreover, the inventory of pre-holiday manufacturing companies does not have obvious signs of restocking, after the holiday starts. More or less replenishment will drive demand."