Negative cost feedback game transactions are improving, and the steel market may start to stabilize and rebound

In the 18th week of 2023, the price changes of steel raw materials and steel products in some regions in China, including 17 categories and 43 specifications (variety), are as follows: The market prices of major steel varieties fluctuated and fell. Compared with last week, the rising varieties increased slightly and remained the same The varieties remained stable, and the declining varieties decreased slightly.
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At present, the international situation is still complicated, Europe and the United States maintain the expected pace of interest rate hikes, and the risk of global economic recession still exists. But for the steel market, the weakening demand for steel in the manufacturing industry has been fed back to the market transaction end, social inventory end, steel mill inventory end, and supply and production end through the industrial chain. At the same time, due to the insufficient release of steel demand for infrastructure and the obvious drag on the demand for steel for real estate, the weak demand for terminal procurement has become increasingly prominent.
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In the short term, the domestic steel market will show a pattern of “slight fluctuations on the supply side, weak release on the demand side, and a significant downward move on the cost side”. From the perspective of the supply side, due to the shock and fall of steel prices, the pressure of losses has obviously impacted on steel enterprises, and the production reduction operations of steel mills are in the process of accelerating implementation, and the short-term supply side will show a situation of slight fluctuations.
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From the perspective of demand, due to the slowdown in demand for manufacturing steel and insufficient demand for construction steel, and the impact of the gradual arrival of the southern rainy season, the pace of construction will also slow down, and the willingness of terminal purchases will be insufficient, but the low Prices will also stimulate some merchants to start bottom-hunting operations. From the cost point of view, with the accelerated implementation of steel mills’ production reduction, the price of raw materials has also shown a trend of significant decline, and the downward movement of production costs will form a significant negative feedback on finished products. The prediction model predicts that this week (2023.5.8-5.12) the domestic steel market will gradually stabilize, accompanied by an oversold rebound in some regions or varieties.