Consumption has been significantly restored in 2023; this year, high-end consumption and border consumption are expected to further increase the level of consumption. By then, with residents' income and consumption willingness gradually improving, consumption policies will continue to be further promoted, and consumption will further increase consumption levels. The foundation for recovery will continue to be consolidated, which will help stabilize consumption. The spot market was steady during the holiday period. During the holidays, the market has a strong wait-and-see sentiment and traders are less willing to stock up. Inventories continue to increase, and the wait-and-see volume of the five major varieties of finished products has increased. The market opened in black today, indicating a rapid rise. In an instant, the market became active. Shipping prices were relatively strong, but the trend among varieties fell back. The demand for sheet metal was slightly better than that for building materials. At the beginning of the new year, "red envelopes" are distributed, and the steel market undergoes another major adjustment.
On December 29, the National Development and Reform Commission revised and released the "Guidance Catalog for Industrial Structural Adjustment (2024 Edition)", involving 7 items in the encouraged steel category; 21 items in the restricted steel category; and 28 items in the eliminated steel category. As an important tool for macro-control, active fiscal policy is intensified to improve efficiency, and the policy "combination punch" is effectively promoted to promote economic recovery. Improve tax support policies and reduce the tax burden on operating entities. Moderately increase the scale of local government special bonds to drive the expansion of effective investment. Consumption has a lasting driving force for expanding domestic demand and economic development. Local fiscal measures have been taken to vigorously boost consumption.
The Caixin China Manufacturing Purchasing Managers' Index (PMI) in December recorded 50.8, 0.1 percentage points higher than the previous month, and was in the expansion range for two consecutive months. Manufacturing production and demand expansion accelerated slightly, reaching their highest levels since June and March 2023 respectively. However, the current internal and external demand is still insufficient, and the foundation for economic recovery still needs to be consolidated. The recovery of the manufacturing industry continues to improve, the demand for steel products has been released, and the demand for coiled plates has increased steadily, which is good for the price trend of coiled plates.
From the perspective of cost-end coal and coke, coke supply has recovered and is higher than the same period in history. However, steel mills have suffered serious losses and their purchasing intentions are weak. Coke prices are gradually coming under pressure, and there are certain expectations of improvement and decline. Coke may oscillate weakly in January. Operation; on January 2, some steel mills in the Tangshan area lowered the price of wet quenched coke by 100 yuan/ton and the price of dry quenched coke by 110 yuan/ton, which will be implemented at zero o'clock on January 3, 2024.
The security inspection situation may have eased in January, and domestic coal production will gradually recover. At the same time, coking coal imports are still optimistic, coking coal supply will recover, and coking coal prices are under pressure. We need to continue to pay attention to changes in the security inspection situation. It is expected that the coking coal market will oscillate and run weakly. However, since the market has already reflected expectations of improvement and reduction, it will have little impact on steel prices.
The arrival volume of iron ore in January may increase, and domestic ore output is expected to remain stable. On the demand side, hot metal production is expected to maintain a downward trend, and some steel mills have maintenance plans at the end of the year. As the Spring Festival approaches, we need to pay attention to the replenishment situation of steel mills at the end of the year. The replenishment just before the holiday may support the spot price.
The loose supply and demand pattern may continue in January, port inventories continue to accumulate, and it is currently in the off-season. Weak reality and strong expectations continue to compete, and the current macro factors have a greater impact on market sentiment. Overall, mineral prices are expected to maintain a high consolidation trend in January.
At present, the spot market price is basically stable, and a few have raised their quotations. Steel traders are still full of expectations for the follow-up steel trend in the new year. However, the current cost of steel mills is at a high level, production enthusiasm has weakened, and the pressure on steel mills to order is not great. The amount of northern materials going south has also decreased compared to previous years, and steel mills are generally more confident in raising prices, which will boost the market trend.
Through research and comprehensive analysis, it is expected that in a short period of time, the overall market will be in a situation of weak supply and demand, enhanced macro expectations, and strong cost support. Steel prices may gradually rise at the bottom of the oscillation.
Post time: Jan-04-2024