Steel stocks further decline limited space

For this week's inventory forecast, analyst Hu Yanping of China United Iron and Steel pointed out to reporters on December 19th that since the current social inventory is already very low, the demand is still weak, so it is expected that the inventory will be slightly adjusted this week.

Hu Yanping further pointed out that judging from the trend of stocks over the years, there is limited room for further declines in domestic steel stocks, and it will increase slightly in the second half of December.

In addition, according to the reporter’s understanding from many steel traders, steel traders are currently reluctant to retain too much inventory. A steel construction trader in Shanghai told reporters that before this time, he would reserve for the winter storage. About 30,000 tons of steel stocks, but this year due to the market outlook is still more difficult to judge, so the current inventory is only a few thousand tons, mainly with the order to sell.

The current steel supply situation does not support the substantial increase in inventory. From the perspective of steel production, crude steel production in November has dropped to its lowest level since last October. According to statistics from the National Bureau of Statistics, China's crude steel output in November was 49.883 million tons, a year-on-year decrease of 0.2%; the average daily output was 1,662,700 tons, a decrease of 5.7% from the previous month. In November, the average daily output of steel bars and rods in China was 423,400 tons and 338,100 tons respectively, which was an increase of 0.1% and a decrease of 0.45% from the previous month in October.

The latest data from the China Iron and Steel Association also showed that in the first half of December, the average daily output of crude steel for key large and medium-sized enterprises in China was 1.521 million tons, which was a month-on-month increase of 1.25%; the national average output of crude steel was estimated at 1.674 million tons, which was a decrease of 0.69% over the previous ten-day period. .

In this regard, Hu Yanping believes that the production of steel mills has gradually reached the momentum of bottoming out, but there may be less volume. On the one hand, due to the recent low market prices (especially the northern market), the production companies are not very active in considering the cost factors; on the other hand, the actual market demand is not enough, the market outlook is not expected to be optimistic, and their willingness to sell goods is not strong considering the cost of capital. The shortage of steel mill orders does not support its full production.