Why did steel prices fall?

China’s steel market started well in the first quarter of this year, and various measures to stabilize growth have been introduced. However, under such circumstances, the national steel market has fallen. What is the reason? According to the preliminary analysis, there are mainly three pressures as follows.
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One is the possibility of a recession in the U.S. economy. The recent crisis of financial institutions in Europe and the United States, the market risk caused by the failure of some important banks and the spillover risk, if not effectively controlled, are likely to lead the economies of Europe and the United States, especially the US economy, into recession. Many view the risk that the U.S. economy will slip into recession this year is increasing. If this happens, it will inevitably have an impact on the demand for steel products in the international market. Of course, another situation may also occur at the same time, that is, a relatively large depreciation of the US dollar as a result, which will also lead to an increase in the price of black series commodities in the international market. In short, bullish and bearish influence each other. At present, the possibility of impact on China’s external demand environment will be greater.
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Second, domestic steel production capacity release pressure is greater. Generally speaking, as long as prices rise and corporate profits increase, iron and steel companies will actively increase production, regardless of the requirements of the competent authorities to limit production. Since the release of steel and steel production is still at a high level at this stage, the relationship between supply and demand and price of steel will be under great pressure from the release of production capacity.
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Third, real estate investment is still in a downward trend. From the analysis of the steel demand structure in China today, real estate is a very important field of steel demand and plays a pivotal role. For a period of time, relevant policies have been intensively introduced across the country, but the driving effect on real estate investment is relatively limited. This is also the biggest drag factor on the rise of the national steel market at this stage.