Where will the market go after the spot transaction of 304L stainless steel pipe weakens?

The market continued to rise for several days, and the transaction of 304L stainless steel pipe market just showed signs of recovery. The Big Business Exchange issued a notice on adjusting the trading limit of some contracts for iron ore futures, which lowered the temperature of the overheated market. The futures market closed suddenly in the afternoon of the 23rd, and the market mood was polarized. The spot transaction of 304L stainless steel pipe weakened. What will the future market do?

First, look at the macro level

1. The Federal Reserve released the minutes of February’s monetary policy meeting

As inflation continues to rise, the mood of the Federal Reserve to raise interest rates continues to rise. Some participants said that they are in favor of raising interest rates by 50 basis points at this meeting. Compared with the economic slowdown or recession, the Federal Reserve is more worried about the risk of long-term high inflation, which is bad.

2. China Steel Association: supply and demand of steel consumption market supported by various policies is expected to remain stable

Affected by the increasing downward pressure on the economy and other factors, in 2022, the global steel market was depressed, and China’s crude steel output was 1.013 billion tons, down 2.1% year on year, the second consecutive year of decline. Especially in the downstream real estate industry, the demand for 304L stainless steel tubes is less than expected. In 2023, with the support of a number of favorable policies, the market is expected to usher in a favorable turn.

3. Since the beginning of the year, the land market in many places has warmed up

On February 22, the recent land market in many places has warmed up, which is related to the return of the property market in key cities. There are signs of the return of the real estate market. The boosting effect on the market is far greater than the impact of the actual demand, which is good for the price of 304L stainless steel tubes.

4. In February, the retail sales of passenger cars reached 730000, up 16% year on year

After the Spring Festival holiday, a number of macro-favorable policies were implemented, and domestic consumption expectations were raised, driving the demand of real estate, automobile and other industries to start, and increasing the demand for steel. In addition, the state focused on restoring economic construction, assisted by financial instruments of the Ministry of Finance and the Central Bank, the popularity of market funds is abundant, and the intensity of capital investment is increased, driving the industry to recover vitality, stimulating economic development, and improving the price trend of 304L stainless steel tubes.

Next, look at the market

The market sentiment recovered last week. The ferrous metal plate only fell in shock last Monday, and then closed at the positive line for four consecutive trading days. The overall rebound in the price of raw materials was greater than that of 304L stainless steel tubes.

In terms of supply, the five major steel varieties increased production for five consecutive weeks, with a slowdown in growth; From the perspective of varieties, the main reason for the overall increase and decrease is the increase in the proportion of short inspection, hot metal conversion and short process resumption in some long-process enterprises.

In terms of inventory, both the factory warehouse and the social warehouse of the five major steel products were destituted this week, and the total inventory was the first to meet the inflection point. Among them, the steel factory inventory fell by 4.1%, and the social inventory fell by 0.1% month-on-month. The destocking of the total inventory shows that the market demand has gradually improved, and speculation and rigid demand have obviously recovered.

In terms of consumption, the variety consumption differentiation at the present stage has a lot to do with the insufficient order saturation of the manufacturing industry after the year and the poor demand performance, but the demand for building materials will gradually improve after the year.

On the spot side, on the one hand, the operating rate of blast furnace in steel mills has maintained a steady upward trend, and the daily consumption of coke has increased, but the stock level of coke in steel mills has remained low, and the steel mills have maintained reasonable purchase of coke, which does not support the further decline of coke price; On the other hand, the overall profitability of coke enterprises is poor. Most coke enterprises have lost money for several months. The resistance to the decline of coke prices is strong, and coke prices can operate stably.

In addition, the trading volume of 304L stainless steel pipe market also gradually recovered, with an average trading volume of 143900 tons last Sunday, up 65% month-on-month. Driven by the increase in trading volume, the accumulation speed of 304L stainless steel tubes slowed down significantly. A series of data in the downstream market has improved, and the “weak reality” situation is expected to continue to improve. Positive demand feedback will also boost the market sentiment at the raw material end. There is room for the price center of the ferrous metal plate to rise. However, it should be noted that iron ore prices are still subject to regulatory policies. After the rapid rise of iron ore prices last week, the DCE issued a reminder that it will continue to strengthen daily supervision, seriously investigate and deal with all kinds of violations, and be alert to the impact of iron ore price fluctuations on other futures varieties in the future. From the perspective of “double coke” itself, the expectation of the recent incremental impact of imported coal has been gradually digested by the market. Driven by the recovery of demand, the price of “double coke” rebounded with the plate.

Finally, in a comprehensive way

With the improvement of the macro policy, the resumption of work and production in infrastructure, real estate, manufacturing and other industries has increased, and the demand has gradually started, driving the market operating sentiment. The demand for downstream terminal projects has gradually started, and the demand for 304L stainless steel pipes has gradually warmed, and the market has entered a period of destocking. Although the prices of iron ore, coke, scrap and other steel raw materials and fuels fluctuate, they are still at a high level. At present, the production cost of 304L stainless steel pipe is still high, and the cost support function is obvious. Therefore, when 304L stainless steel pipe enterprises determine the ex-factory price of steel, the above adjustment is basically the priority. This will lead to higher procurement costs for steel traders, which also determines that the price of 304L stainless steel pipe will not fall significantly in the later stage. The medium-term direction of steel price has not changed, and the price fall is an opportunity to get on the train again. It is recommended that traders take bargains, try not to blindly chase up the rise and fall, and operate steadily.