Strong supply and weak demand game cost resilience, continued rebound in weak steel market

At present, the crisis of the US debt ceiling agreement has come to a perfect conclusion. There are also optimistic expectations on the prospect of the Fed raising interest rates in June. Inflationary pressures in Europe and the United States may further cool down. It is a harbinger of recovery, but the financial risks of European and American banks are still likely to spill over. The global economy is still facing the pressure of recession, while the Chinese economy continues to recover. In May, the official and Caixin PMI index diverged to a certain extent, indicating that the domestic economy is recovering in an all-round way. Still gathering strength, the problem of shrinking demand is still prominent, business confidence is still weak, and production and operation activities are cautious.
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In the short term, the domestic steel market will present a pattern of “cohesion of economic recovery, short-term demand contraction, relatively high supply, and pressure on cost resilience”. From the perspective of the supply side, due to the rebound of steel prices and the pressure on cost resilience, steel mills are on the verge of profit and loss, and the short-term supply side will show a situation of fluctuations and declines.
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From the perspective of the demand side, due to the alternation of high temperature and rainy weather and the superposition of construction site shutdown during the college entrance examination will have a greater impact on the progress of construction projects, the procurement of terminal demand will maintain a certain pace, but the shock and rebound of steel prices will also stimulate a certain amount of demand. Release of stocking requirements.
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From the cost point of view, the price of iron ore and scrap steel has strengthened again and the price of coke has weakened, making the cost side show a trend of resilience and pressure. It is predicted that this week (2023.6.5-6.9) the domestic steel market will continue its weak rebound, but it cannot be ruled out that some regions or varieties may decline again under the drag of poor transactions.