Strong expectations fall into weak reality, and the road to strength in the steel market is bumpy

Price fluctuations in the major steel markets are relatively strong. Compared with last week, rising varieties increased significantly, mediocre varieties decreased, and falling varieties decreased significantly. Among them, 29 rose varieties, 28 more than last week; 8 varieties remained the same, 8 less than last week; 6 decliners, 20 less than last week. The domestic iron and steel raw material market fluctuated and consolidated, the price of iron ore rose steadily by 40 yuan, the price of coke remained stable, the price of scrap steel fluctuated and consolidated, and the price of steel billet rose by 40 yuan.
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Currently, inflationary pressures in Europe and the United States are still relatively high. In July, Europe and the United States will continue to maintain the process of raising interest rates, and the global economy is still facing the risk of recession. The Chinese economy will introduce more practical measures to expand the potential of domestic demand and activate market vitality. The PMI index rose slightly in June, indicating that the impetus to promote the overall economic recovery has been further strengthened, and the foundation of economic recovery has been continuously consolidated. Still stand out. As far as the steel market is concerned, the continuous introduction of policies to stabilize growth has played a positive role in stabilizing market confidence, but the continuous emergence of the traditional off-season effect has also restricted the steel market.
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In the short term, the domestic steel market will present a pattern of “consolidating the foundation of economic recovery, promoting the landing of residents’ consumption, actively boosting market confidence, and showing the traditional off-season effect”. From the perspective of the supply side, due to the promotion of the profit-seeking effect, the willingness of steel mills to release production capacity is still strong, and the short-term supply side will show strong resilience.
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From the demand side, the high temperature in the north and the rainy weather in the south affect the construction progress of outdoor projects. The recovery of the manufacturing production index will drive the effective return of manufacturing steel, and the overall terminal demand will gradually pick up. Appears in the off season.
From the perspective of cost, iron ore fluctuated slightly, scrap steel prices rose steadily, and coke prices were stable, making cost support maintain strong resilience. It is expected that this week (July 3-July 7, 2023) the domestic steel market will fluctuate and strengthen, but it cannot be ruled out that the transaction will be lower than expected and lead to a callback.