In summary, the overall actual supply of structural steel has not changed much in 2023. However, with the increase of production capacity, market competition pressure has further increased, and the demand side has shown a significant improvement compared to 2022. However, combined with the pressure brought by high inventory at the beginning of the period, the total supply still exceeds the total demand, driving the overall price decline. For 2024, the competition pressure on the supply side will not decrease, and the process of “upgrading from general to optimal” will not change. The market supply may remain high, but due to the impact of policies and cyclical changes, the demand side is expected to continue the improvement since the second half of the year, and prices are expected to rise slightly.
In 2023, the domestic and international economic situation has become more complex and volatile. Despite a series of macroeconomic measures to promote consumption, factors such as the decline in real estate and infrastructure investment have affected the weak downstream demand in the steel market. Coupled with the rise in raw material prices, structural steel prices are in a continuous game of high costs, strong expectations, and weak reality, resulting in an overall decline in steel prices. However, from the performance in the fourth quarter, The gradual increase in demand has led to a significant rebound in prices.
Price side: Structural steel prices fell by 12.02% in 2023
In 2023, the price of structural steel showed a trend of first rising, then falling, and then slightly fluctuating before rising. As of December 29, the annual average price of structural steel 45 # 50mm was 4166.81 Yuan/ton, a decrease of 569.54 Yuan/ton from the average price in 2022, a decrease of 12.02%. Among them, the highest price of the year appeared in mid March, with a highest price of 4541.67 Yuan/ton, and the lowest price appeared in early June, with a lowest price of 3908.33 Yuan/ton and a price difference of 633.34 Yuan/ton.
In 2023, China’s structural steel production capacity has accelerated and has a good development prospect. This is mainly due to the tilt of national policies, weak demand for threaded steel in the sluggish real estate market, and the overall profit of structural steel being better than that of threaded steel. As a result, the enthusiasm of steel mills to produce structural steel has significantly increased. Previously, enterprises that have been producing threaded steel have successfully transformed into new fields by comprehensively measuring the cost profit and sales situation of structural steel and threaded steel.
The supply side (production+import) of structural steel has not changed much in 2023. According to monitoring data, the production of structural steel in 2023 was 30.0477 million tons, an increase of 0.79% year-on-year. The import volume of structural steel from January to November 2023 was 103200 tons, and it is estimated that the annual import volume of structural steel in 2023 will be 112200 tons, a year-on-year decrease of 69.58%. In 2023, the total supply of structural steel (production+import) was 30.1599 million tons, a decrease of 0.07% compared to the previous period. On the one hand, the production losses of structural steel have intensified in 2023, and the production enthusiasm of enterprises has decreased. However, due to the impact of the production capacity conversion of threaded steel, the production of structural steel has slightly increased; On the other hand, due to the weakening domestic demand, the import volume of structural steel has significantly declined. However, due to the small import base in recent years, the overall import reduction is basically the same as the increase in domestic production.
From the perspective of inventory structure, in 2023, the inventory of structural steel enterprises showed a trend of first decreasing, then increasing, and then decreasing, while the social inventory of traders showed a trend of first increasing and then decreasing. As of December 29, 2023, the total inventory of 29 structural steel production enterprises in China monitored by data was 812100 tons, an increase of 130900 tons or 19.22% compared to the end of December 2022. The highest point for the year was 994900 tons in late January. In terms of social inventory, the total inventory of 66 trading enterprises in Shandong, Hebei, Jiangsu and Zhejiang regions was 948600 tons, a decrease of 80900 tons or 7.86% from the end of December 2022. The highest point for the year was 1.269 million tons in early February.
From the perspective of supply trends, based on the continuous increase in production capacity of production enterprises, it is expected that the production of structural steel will show an increasing trend in 2024. It is expected that the production of structural steel in 2024 will reach 32.29 million tons, an increase of 7.46% compared to 2023. Due to the very low dependence on imported structural steel, the increase in production can represent changes in market supply. In 2024, the supply of structural steel will increase, and the pressure brought by the increase in supply may increase for steel prices.
Prediction: Improvement in demand may drive up steel prices in 2024
In 2024, the supply and demand fundamentals of structural steel may show a dual increase, and with the continuous improvement of demand, the center of gravity of structural steel prices is expected to shift slightly upwards. On the supply side, the pressure of supply competition remains unchanged, and the process of “conversion from ordinary to excellent” remains unchanged. Market supply may remain high, especially with the decline in real estate demand and the high-quality development of the steel market. The prospect of structural steel improving has also strengthened the expansion of upstream and downstream industrial chains by some production enterprises, or the scheduling situation of “conversion from ordinary to excellent”. However, the increase in supply may give steel prices some downward pressure; On the demand side, with the continuous implementation of a series of macroeconomic measures to expand investment and promote consumption, market confidence has been boosted. In addition, with the early issuance of special bonds in 2024 and more moderately loose policies and funds, the demand for steel in industries such as automobiles, construction machinery, and shipbuilding will continue to be optimistic in 2024. In addition, due to the cyclical changes in structural steel itself, the demand side is expected to continue the improvement since the second half of the year, The price center is expected to shift upwards. On the cost side, considering that the steel industry has undergone nearly 3 years of adjustment, most steel mills are operating relatively steadily. In addition, with the expectation of increased output in 2024, raw material prices are expected to operate at a relatively high level. The production costs of steel mills may have limited decline, which may have a strong support for steel prices. Overall, with the expectation of a sustained positive macro outlook in 2024, there is room for further improvement in demand. Coupled with high cost support, it is expected that the center of gravity of structural steel prices will shift slightly upwards in 2024, and the price trend in the second half of the year may be better than that in the first half.
Post time: Jan-20-2024