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Raw materials may fall back, steel prices may shock downward 2022-12-09

Raw Material News

January 2, 2023 Tangshan steel billet and finished products spread: 145 narrow belt 4000 down 20, with billet spread of about 250; 5 # angle 4110 stable, angle billet spread of about 360; 20 # channel 4150 stable, slot billet spread of about 400; 25 # I-beam 4180 stable, work billet spread of about 430; 25 # rebar 3990 stable, spiral billet spread of about 240.

The port spot end of the trade is still positive, the general sentiment to support prices, some speculative operations. The steel mills stock replenishment just need to purchase varieties mostly PB powder, mixed powder, super special powder. In terms of forward resources, activity has improved, with PB powder premiums holding firm while lump ore premiums are under pressure. There were three deals on the platform for PB, Mac and Newman powders and one each for BRBF powder, except for one PB powder which was February Platts +1.6. The short-term oscillation of mining prices is expected to run strong, concern about the follow-up of the Spring Festival steel enterprises to replenish the operation. The general index reference 115-120 U.S. dollars range.

Finished product dynamics

The actual price of the hot coils is expected to be adjusted steadily in the short term, with Tangshan 4080 down 10, Handan 4150 stable, the market demand is weak, mainly wait and see, merchants are not willing to operate, adjusting prices as they go, the overall shipments are not good.

The company’s main business is to provide a wide range of products and services to the market. The last day of the festival, the market offer shipping traders gradually increased, but the lack of demand to follow up, the transaction performance is on the light side, the market price to maintain the dilemma of up or down situation. Considering that the cost side has loosened, it is expected that the strip steel is stable in the weak adjustment.

The mainstay of the North China board today is stable, Tangshan base price 4030, mainstream specifications plus 20, Wu’an Puyang 4060-4070 stable, the last day of the holiday, the market flat wait and see, the cost side of the holiday support slightly down, business confidence at high levels, but the resource level is low, the operation with the price of shipments, the overall trading is more lukewarm, is expected after the holiday board price stability in a weak adjustment.

The main reason for this is that the price of the profile is stable in Tangshan. The seasonal off-season, demand continues to shrink, and downstream purchasing positivity is poor. However, the cost side support strength still exists, manufacturers offer more stable, the market wait-and-see atmosphere is thick. It is expected that after the holidays, the type price will be weak and stable adjustment operation.

Market macro hot topics interpretation

[Support policies take effect, real estate debt issuance to good]

In December 2022, the issuance of real estate bonds in the primary market has improved significantly. As of 28 December 2022, the total number of real estate bonds issued in the month was 57, with an issue size of RMB47.607 billion, a significant improvement from RMB29.076 billion in November.

Interpretation: real estate ushered in a big boon, which is conducive to maintaining the basic stability of bond financing, supporting high-quality real estate enterprises to issue bond financing and helping the steel market to meet the cold winter.

[On December 30, 2022, the central bank conducted 183 billion yuan of 7-day reverse repo operations]

On December 30, 2022, the central bank conducted 183 billion yuan of 7-day reverse repo operations with a winning rate of 2.00%, unchanged from the previous one. As 2 billion yuan of reverse repo expired on the same day, a net injection of 181 billion yuan was achieved.

Interpretation: On the last working day of 2022, the central bank carried out reverse repo operations to continue to provide policy macros to the steel industry to ensure the flow of funds in the market, with favorable policies.

Later trend forecast

1, raw material costs remain high

Iron ore futures hit a new high in the second half of the year, Friday the main contract closed up to 845 yuan / ton, and the price of iron ore remains bullish in the short term, “crazy stone” continues to go crazy. In terms of coke, as coke and steel enterprises enter the second half of the winter storage replenishment process, the downstream enthusiasm for raw material procurement has mostly cooled, coke market bullish sentiment weakened. Although coke has slightly warmed up, it is still at a higher price, and in addition to the iron ore factor, the cost of iron is still on the upside.

2. Off-season effect highlighted by temperature factors

Affected by the cold air across the New Year’s Eve, the temperature in China’s northeast and north central China will drop by 4~6℃ in recent days, including the eastern part of Inner Mongolia and the northeastern part of the local area may drop by more than 8℃. New Year’s Eve in most areas in the north colder minimum temperatures below freezing, northwest southwest cloudy rain and snow weather frequently. Temperatures go further down, outdoor construction difficulties increase, the off-season effect continues to be weak, holding steel prices up.

3, steel prices are higher, winter storage has not really fully started

It is not difficult to find that the steel price in 2023 is lower than the level of the same period in the past two years, and the Spring Festival in 2023 is earlier than in 2022, nearly 20 days from the Lunar New Year. Unlike in the past, affected by many factors such as the epidemic and prices, some steel mills have taken the initiative to overhaul and take an early holiday, and the supply pressure of some finished products is tight. According to our survey found that most traders believe that the current steel prices are at a higher price did not reach the psychological expectations of the price, although some businesses have winter storage intentions but did not really start to winter storage, still hesitant. In addition, the current market to cut prices to stimulate shipments, not a benign operation.

In summary, the current steel enterprises winter storage to fill the late, raw materials or will fall, steel prices or will shock downward, remind us to pay more attention to raw materials and finished products trend, to fill the low. (Source: Fubo Steel)