This week (September 9 - September 14) domestic steel prices fell in an all-round way. The construction steel index closed at 2,570 yuan per ton on Friday, down 40 yuan per ton annually.
On the futures side, last week's sharp decline in warehousing growth of threaded steel futures, accelerated decline in spot steel prices, as well as the general sharp drop in U.S. stocks and crude oil, made the futures market bearish atmosphere strong, prices fell unilaterally.
The comprehensive inventory monitoring data of iron and steel spot trading platform show that although the market price has dropped continuously, the transaction situation has improved due to the traditional consumption season and the stock-up before Mid-Autumn Festival in some construction sites. The daily average purchasing volume of the monitored Shanghai spiral terminal has risen by 42.9% annually. Due to the unoptimistic expectations of the future market, middlemen have increased their efforts to actively inventory, and the market inventory has decreased significantly.
Throughout the national market, steel market inventory rose for the ninth consecutive week, and the current inventory level is still down 6.57% compared with the same period last year. In mid-September, social inventory is still showing an upward trend, which is rare in the past years, and has a certain impact on market confidence. However, last week, the national steel inventory growth rate was the smallest in nearly nine weeks, and wire rod and threaded steel inventory from the rise to decline. With the gradual improvement of demand after the Mid-Autumn Festival, it is expected that the national steel market inventory will turn into a downward trend.
In addition, the output of crude steel in August in China increased significantly year-on-year and ring-to-ring ratio. In August, China exported 9.01 million tons of steel, a 12.52% drop in the ring-to-ring ratio. Output growth and export decline led to an increase in the supply of resources in the domestic market, a continuous rise in inventories and increased supply pressure.
Qiu Yuecheng, a senior analyst, believes that although China's economy showed some signs of stabilization and warming up in August, under the situation of rising crude steel production and falling exports, the pressure of supply exceeding demand in domestic steel market appears, and the social inventory continues to rise. The low resource inventory accumulated in the early stage of the industrial chain was sold out in September, which further suppressed the demand release in the peak season, and the market performance was not prosperous during the peak season. Domestic steel prices are expected to continue downward pressure in the short term.