Steel mills have strong willingness to hold prices, and news of limited production in the steel market is often released

In the first quarter of this year, affected by the new coronary pneumonia epidemic, the Chinese economy experienced a severe decline and steel demand was also stagnant. With the gradual fading of the new domestic pneumonia epidemic, under the active promotion of the government and relevant departments, the rate of resumption of work in the second quarter has increased significantly. Some construction companies have accelerated their work. The demand for steel has risen sharply, or will exceed the level of the same period last year.

From the perspective of the industry, the automobile manufacturing industry declined the most in the first quarter, reaching 22.4%. Although the railway, shipbuilding, aerospace and other transportation equipment manufacturing industry is still growing, the growth rate is only 0.5%, which is far from last year. In addition, in the first quarter, the national fixed asset investment and the national real estate development investment both saw a sharp decline, and steel demand suffered a great impact.

With the increase in the resumption rate, the increase in steel demand is also reflected in the inventory. In mid-May, the average daily output of crude steel reached the next new high, and the current social stock of steel still maintained a downward trend. As of May 29, 2020, the social inventory of 29 key cities counted by Lange Steel Net was 14.171 million tons, a decrease of 553,000 tons from the previous week, a decrease of 3.76%; there has already been an "eleven consecutive decline". The cumulative decrease was 8.956 million tons, a decrease of 38.73%.

It can be seen that the demand for steel in the first two months of the second quarter has recovered very well and has exceeded the level of the same period last year. In the later period, even if the additive effect is weakened, it can still maintain the previous level with policy support, so the overall demand in the second quarter will exceed the same period last year. This will provide some support to the recent steel prices.