1. The international steel market weakened in January
According to (January 20 – January 27) my Steel net international steel price index shows that the global steel price index is 242.5, a week-on-week increase of 0.87%, month-on-month decline of 26.45%. The flat wood index was 220.6, increasing by 1.43% week on month and decreasing by 33.59% month on month. The long wood index was 296.9, increasing by 0.24% week on month and decreasing by 15.22% month on month. The European index was 226.8, up 1.16% on week and down 21.79% on month. The Asian index stood at 242.5, up 0.54% on week and down 22.45% on month.
2. Global crude steel production decreased slightly in December 2022
In December 2022, the total crude steel output of 64 countries included in the statistics of the International Iron and Steel Association was about 141 million tons, a year-on-year decrease of 10.76%; Crude steel output in the Chinese mainland in December 2022 was 77.89 million tons, down 10.66% from the same period last year. China’s output accounts for 55.36 percent of global output.
3. Review of major domestic markets in January
In January, the profit of steel mills was restored, the price difference between screw thread and steel type and billet narrowed, and some steel mills increased the foreign sales of billet, Tangshan billet daily supply maintained 40,000-50,000 tons, and East China Steel Mill also increased the foreign sales of billet. Adjacent to the Spring Festival downstream billet rolling steel gradually stopped production for maintenance, steel billet demand weakened, traders are more than set entry, the national billet social inventory increased to 1.5 million tons. The Tangshan market rose to 1 million tons. Supported by strong expectations, the price of steel billet in January continued to pull up, including Tangshan steel billet factory price increased 110 yuan/ton, Jiangyin market price increased 80 yuan/ton.
4. Raw material market
Iron ore: look back in January 2023, the macro favorable policy to drive the black plate, iron ore price shocks upward. As of January 30, Mysteel62% Australian powder forward spot index 129.45 dollars/dry ton, up 10.31% month on month; 62% Macao powder port spot price index 893 yuan/ton, up 4.2% from the end of last month. Domestic mine supply weakened, domestic mine prices rose slightly this month. Overseas shipments ended in January, with global shipments down 21 million tons month-on-month, and domestic monthly port iron ore arrivals reaching 108 million tons, a slight increase of 160,000 tons month-on-month. Overall, iron ore supplies are down from the end of last year. In terms of demand, profit of steel mills was repaired in January, and some steel mills have production resumption plans after superimposed. It is expected that average daily iron ore demand in February increased slightly compared with that in January. In terms of inventory, port opening decreased during the Spring Festival, and port inventory increased by 5.4 million tons to 137 million tons. At present, the absolute value of steel mill inventory has been at a historical low due to consumption in the period, and the inventory and sales ratio decreased by 1.36 days from the beginning of the month. From the perspective of post-holiday demand, the profit recovery of steel mills and the downstream resumption of work are expected to be strong, steel mills have certain purchasing power and replenishment space.
The main logic supporting the market rise since December 2022-January 2023 is the market’s expectation of domestic economic recovery. During the Spring Festival, residents’ consumption released a certain vitality, showing signs of improving demand, but the strength of the recovery did not show comprehensive and exceed expectations. On the other hand, on the first day after the Spring Festival, China issued policies to encourage and support the qualified and willing people to settle in the city, which continued to release the signal of economic boost, so the market’s expectation of economic recovery in the short term is difficult to be falsified. China’s iron ore imports fell seasonally in February, possibly due to a month-on-month drop in shipments from overseas in January. However, the resumption of production in domestic mines after the holiday may supplement the supply. However, in some areas, production restrictions after last year’s accidents have not been lifted, so this supplement will be limited. At the demand end, the profit rate of steel mills is still low at present, and the increase in demand brought by the rapid increase in pig iron production may be difficult to achieve in the short term. Then, due to the earlier Spring Festival this year, the end demand may start in March, and the demand for replenishment after the holiday may be weak.
Coke: Looking back on the coke market in January, the overall pattern of stability is weak. Coke price for two rounds of reduction, the range of 200-220 yuan/ton. For a month before the Spring Festival, the coke market is slightly pessimistic. Early winter storage promoted, coke prices have continued to rise four rounds, the continuous repair of profits, coke supply margin improved. The steel plant before the steel price is mainly rising, but it is difficult to mask the weakness of the transaction, continuous losses under the low iron production. With the end of steel mills winter storage, steel mills for high price resistance to coke, coke market overall weakening significantly.
Looking ahead to February, coke there are signs of rebound. Coke prices have stabilized and rebounded, but the rebound space is limited. With the convening of the local NPC and CPPCC, various favorable economic policies have been introduced, and market confidence has been continuously boosted in seeking progress in stability. With the warmer weather, steel off-season has passed, steel blast furnace production has resumed, the demand for coke, coke market began to strengthen. However, steel mills and coke enterprises early due to sustained losses, the repair of profits need time to promote, in this and that, the two sides of the price adjustment is more cautious, rebound space or will be limited.
Post time: Feb-02-2023