In 2023, consumption has seen a significant recovery; This year, high-end consumption and cross-border consumption are expected to further enhance the level of consumption. At that time, with the gradual improvement of residents’ income and consumption willingness, coupled with the continued efforts of consumption promotion policies, the foundation of consumption recovery will continue to be consolidated, which will help stabilize consumption.
On December 29th, the National Development and Reform Commission revised and released the “Guiding Catalogue for Industrial Structure Adjustment (2024)”, which includes 7 encouraged items for steel industry; 21 restrictions on steel; 28 items in the steel elimination category. As an important tool for macroeconomic regulation, proactive fiscal policies have been strengthened and improved, effectively promoting economic recovery and improvement. Improve tax and fee support policies and reduce the tax burden on business entities. Moderately increasing the scale of local government special bonds, driving the expansion of effective investment, consumption has a lasting driving force for expanding domestic demand and economic development, and various fiscal measures are taken in various regions to vigorously boost consumption
In December, the Caixin China Manufacturing Purchasing Managers Index (PMI) recorded 50.8, which is 0.1 percentage points higher than the previous month and has been in the expansion range for two consecutive months. The expansion speed of manufacturing production and demand has slightly accelerated, with the highest rates since June and March 2023, respectively. However, current internal and external demand is still insufficient, and the foundation for economic recovery still needs to be consolidated. The continuous recovery of the manufacturing industry has released demand for steel, and the demand for coil plates has steadily increased, which is beneficial for the price trend of coil plates.
From the perspective of cost side coal and coke, the supply of coke has recovered, higher than the historical level of the same period. However, steel mills have suffered serious losses, weak purchasing willingness, and coke prices are gradually under pressure. There is a certain expectation of an increase or decrease, and coke may oscillate weakly in January; On January 2, some steel mills in Tangshan area lowered the prices of wet quenching coke by 100 yuan/ton and dry quenching coke by 110 yuan/ton, to be executed at midnight on January 3, 2024
The security situation may ease in January, and domestic coal production will gradually recover. At the same time, coking coal imports remain optimistic, coking coal supply will recover, and coking coal prices are under pressure. It is necessary to continue to monitor changes in the security situation, and it is expected that the coking coal market will oscillate weakly. However, as the market has already reflected the expectation of an increase or decrease, the impact on steel prices is not significant.
The arrival volume of iron ore in January may increase, and domestic ore production is expected to remain stable. On the demand side, the production of molten iron is expected to continue a downward trend, and some steel mills have maintenance plans by the end of the year. As the Spring Festival approaches, it is necessary to pay attention to the situation of steel mills replenishing their inventory at the end of the year. Supplementing inventory before the holiday may provide support for spot prices.
The loose supply and demand pattern in January may continue, with port inventories continuing to accumulate and currently in the off-season. The weak reality and strong expectations continue to play a game, and the current macro factors have a significant impact on market sentiment. Overall, mining prices are expected to maintain a high consolidation trend in January.
At present, the spot market prices are basically stable, with a few price increases. Steel traders are still full of expectations for the future trend of steel in the new year; At present, the cost of steel mills is at a high level, and production enthusiasm has weakened. There is not much pressure on steel mills to place orders, and the southward shipment of North Materials has also decreased compared to previous years. The overall confidence of steel mills in raising prices is strong, which will boost the market trend.
It is expected that in the short term, 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-05-2024