At the end of July, steel traders withdrew funds, and domestic steel prices could not rise

On July 28, domestic steel prices fluctuated weakly, and the ex-factory price of Tangshanpu billet was stable at 3370 yuan/ton. In late July, steel futures rose and fell. Coupled with weak demand in high temperature weather and lack of market confidence, merchants increased their willingness to cash out shipments at the end of the month, alleviating financial pressure. The volatility of the futures was weak, and the closing price of 3724 fell 0.75%, which has fallen below the 5-day moving average. If there is no major positive news to stimulate, steel futures may continue to adjust within a narrow range.

In the early trading, steel futures opened lower and moved higher. In the morning, steel spot prices in most regions in China remained stable. In the afternoon, as the futures plunged, steel prices in some areas were loosened. At the same time, the steel market reported that the overall transaction performance was average and speculative demand decreased. At present, the recent transaction level has a trend of shrinking. At the same time, affected by the high temperature weather, the accumulation cycle has not ended, and there is still room for steel inventory to rise.

It is worth noting that Brazil’s iron ore export volume was 30.048 million tons in June, with an average daily export volume of 1.43 million tons. There was a clear rebound in July. In the 18 working days of the first four weeks, 27 million tons of iron ore were exported, with an average daily export of 1.5 million tons of iron ore. The tight supply and demand pattern in the second half of the year is expected to gradually improve.

On the supply side: Although domestic steel mills generally make small profits, their willingness to actively reduce production is still low, and the current steel output is still high. The national average daily output of crude steel in June was 3.0526 million tons, which is expected to be 2.9-3 million tons in July, which is still at a high level during the year. According to the author's calculations, the gross profit per ton of rebar at Tangshan Changjiang Steel Plant is only about 100 yuan.

In terms of demand: after the rainy season in the south, high temperature weather has come, and the overall demand for steel in July was weak. At the same time, steel demand in the second half of July may be weaker than that of the first half, mainly due to speculative demand entering the market in the first half due to speculative capital speculation. According to Mysteel research, in recent days, the daily trading volume of building materials by 237 traders across the country has remained at a weak level near 200,000 tons.

On the whole, steel futures adjustments are superimposed on high-temperature weather. In the short term, the demand for steel will be weak, and the willingness of steel mills to actively reduce production is still low, resulting in greater pressure on supply and demand fundamentals. At the same time, there is no good news to speculate on macro funds, and short-term steel market prices may fluctuate weakly.