Can the steel market after the “slump” usher in a “surge”?

Since June, due to the obvious lack of demand release in the off-season, the domestic steel spot market has entered a “slump” market. The national hot-rolled coil spot fell by 545 yuan from the beginning of the month; the national cold-rolled coil spot fell by 428 yuan from the beginning of the month; the national medium and heavy plate spot fell by 371 yuan from the beginning of the month.
In the first half of the year, the domestic steel market showed an obvious situation of “strong expectations” and “weak reality”, so can the steel market after the “slump” usher in a “surge”?
First, from the perspective of supply, due to the recent slump in steel prices, domestic steel production enterprises have suffered significant losses, which has forced steel mills to gradually increase their efforts to maintain and reduce production. Driven by the policy, the production rhythm of domestic large and medium-sized steel enterprises is relatively less affected by the “slump” in steel prices. Considering that the domestic economy will gradually recover in the second half of the year, domestic iron and steel production enterprises may advance the production cycle to ensure the gradual return of steel demand in the future, but the production capacity release of short-process iron and steel production enterprises will be significantly suppressed.
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Second, from the perspective of demand, the policy of stabilizing growth has entered the stage of intensive introduction, and will accelerate its implementation stage. The domestic economy will support the economic recovery from the aspects of enhancing the consumption of residents and enterprises and expanding effective investment.
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Third, from the perspective of cost, the recent “plunge” of steel prices has brought about a sharp decline in the coke and iron ore markets. The coke market has already experienced a “jump up and down” market, and the iron ore market has also begun to come under obvious pressure. . Due to the support of the high cost in the early stage, the domestic steel price will rebound after the breakdown of the cost line, but the recent significant downward movement of the production cost line in the steel market may bring about another drop in the later steel price.
On the whole, the domestic steel market will face increasing pressure from the tide of global interest rate hikes in the near future, the release of high-level supply will slowly shrink, the demand in the off-season will weaken and continue to impact, the cost of the steel market will turn down, the hard bottom of the steel market will turn soft, and the expected period of stable growth will be prolonged. and other factors. In the short term, the domestic steel spot market may show a slight rebound after the “slump”, but the obvious decline in production costs may force steel prices to drop again.
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