Steel production capacity will be released

The latest data released yesterday by the China Iron and Steel Association and the National Bureau of Statistics show that in July China’s crude steel output fell for the third consecutive month. In addition, with the rebound of the steel market in late July, the inventory of finished products of key large and medium-sized enterprises declined rapidly and inventory pressure was eased. However, the industry believes that under the influence of a better sales situation, a rebound in steel prices, and a combination of corporate profits, the continued decline in crude steel production is unlikely to continue.

Crude steel production continues to decline

According to the latest statistics from the National Bureau of Statistics, China's crude steel production in July reached 51.74 million tons, an increase of 2.2% year-on-year, and daily production of crude steel was 1.669 million tons, a decrease of 123,000 tons from the previous month. This is the third consecutive monthly decline in crude steel production. However, from January to July, crude steel production still increased by 18.2% year-on-year to 37.548 million tons.

While the steel production is declining, the inventory pressure of steel mills is also eased. According to the latest data from the China Iron and Steel Association, at the end of July, the inventory of key large and medium-sized enterprises was 8.26 million tons, a net decrease of 950,000 tons from the end of June, a decrease of 10%, the first decline in the past four months.

According to sources from the industry, in the middle and early July, the domestic steel market continued to decline, and the pressure on production costs of iron and steel enterprises had not been substantially relieved. Some large and medium-sized enterprises also joined the ranks of maintenance, which was the reason for further decline in crude steel production.

The production capacity will be released again

At the same time as production volume decreased, as the steel market rebounded in late July and sales increased, the pressure on in-plant inventory of key large and medium-sized steel companies was effectively eased. Under this circumstance, the industry expects that steel mills may release production capacity again, and the decline in steel output may end.

On July 19, the steel market saw a long-lost violation of the bomb market, driven by many factors including financial capital, cost support, and market expectations. According to the data, up to now, Shanghai secondary threads and 5.5 hot coils have pulled up to 3,900 and 4,230 yuan/ton, with an increase of 7% and 11% respectively.

Under the stimulation of the rebound in steel prices, traders have the intention to make short positions or increase positions, and the willingness of downstream production enterprises to make up the bank is also relatively strong, and the sales of steel mills are improving. According to data from the Xunjian Xunbao, the average daily sales volume of key enterprises in late July reached 1.41 million tons, an increase of about 31% from the middle of the previous month.

“Before the steel mills have been overhauled, the steel mills are likely to release production again under the influence of a better sales situation, a rebound in steel prices, and a profit-seeking nature.” Analysts believe that crude steel production is unlikely to fall under existing levels. Further decline. However, based on the fact that the contradiction between supply and demand is not prominent, and there is a strong upward trend in the ex-factory prices of large steel mills in September, the steel prices will continue to fluctuate upward in the future.