Steel market weekly observation: Steel price dilemma under the influence of weak demand reality and strong production cut expectations

Last week, the weakening of macro expectations, the continued fermentation of crude steel production limit news and the depressed demand in the spot market led to the market pattern of steel price reduction and profit contraction, in line with our weekly direction judgment; Last week, the market also confirmed the cognitive inflection point of this year's #crude steel production limit: from skepticism to relative confirmation.

It is estimated that the production restriction policy will begin to fall in mid-to-late August, and the impact on production will begin to be reflected in mid-to-late August, but it will be significantly reflected after September. Last week, Tangshan area #steel mills to resume production led to 247 average daily #molten iron production rose 0.29 million tons to 2,409,800 tons, this week with the resumption of production in local areas, it is expected that there is still room for incremental molten iron production, but can not underestimate the impact of the plate and spot after the landing of limited production policy.

It is expected that in the coming week, steel prices will continue to be under pressure under the influence of weak demand reality and strong production cut expectations, and the market trading logic will anchor the strength and pace of the upcoming crude steel production limit and its valuation of realistic prices.

#Hot roll: Heavy rainfall weather also limited the demand for hot roll: last week, the hot roll table demand fell 130,000 tons to 3.02 million tons, and the total inventory of hot roll went to the storage after two weeks. However, with the weakening of the typhoon weather impact, it is expected that the total inventory of hot rolls will turn to storage again this week. This week, the landing rhythm of limited production is more clear, and the market is expected to reduce the amount of hot rolls after the landing of limited production, and it is expected that the pan roll screw difference is still expected to expand (the current main contract roll screw difference of 260 yuan/ton, is still expected to have 20-40 room to rise).

The core of this week's market trading is still transitioning to the intensity and rhythm of limited production, and before the landing of limited production, the logic of falling raw material prices driven by raw materials is still maintained.