Crude steel daily output of nearly 2.79 million tons! Raw material strength! Today’s steel price… …

Today’s Guide >>

01

Central bank RRR reduction and MLF excess continued to do landing

02

In August, the daily production of crude steel fell from the previous month

03

Signs of a pick-up in inflation could trigger a wave of junk bond defaults

Macro news

01

Central bank RRR reduction and MLF excess continued to do landing In order to maintain reasonable and abundant liquidity in the banking system and maintain stable liquidity at the end of the quarter, the People’s Bank of China carried out 591 billion yuan medium-term lending facility (MLF) operation, and the winning interest rate was 2.50%, which was unchanged. At the same time, 34 billion yuan 14-day reverse repurchase operations were carried out, and the winning interest rate fell by 20 BP. RRR cut landing. Experts said that the reduction of the reserve ratio superimposed over the continuation of the MLF operation, releasing a counter-cyclical adjustment signal, which is conducive to easing the tightening situation of the capital surface, supplementing liquidity, and helping the economy to pick up. (China Securities News)

02

Retail sales of motor vehicles rose 1.1 per cent in August from a year earlier

On September 15, according to the data of the National Bureau of Statistics organized by the China Association of Automobile Manufacturers, in August 2023, the retail sales of automobiles were 411.2 billion yuan, an increase of 1.1% year-on-year, accounting for 10.8% of the total retail sales of consumer goods in the whole society. From January to August 2023, the retail sales of automobiles were 3,039.3 billion yuan, an increase of 4.9%, accounting for 10.1% of the total retail sales of consumer goods in the whole society.

03

In August, the daily production of crude steel fell from the previous month

China Iron and Steel Association data show that in August 2023, the national production of crude steel 864.10 million tons, an increase of 3.20%, a daily output of 2.7874 million tons/day, down 4.83% from the previous month; The production of pig iron was 74.62 million tons, an increase of 4.80%, and the daily production was 2.4071 million tons/day, a decrease of 3.84% from the previous quarter; The production of steel was 116.52 million tons, an increase of 11.40%, and the daily output was 3.7587 million tons/day, the same as the previous quarter.

04

Signs of a pick-up in inflation could trigger a wave of junk bond defaults

Bank of America credit strategist Oleg Melentyev said U.S. inflation is showing early signs of picking up, and if it accelerates from here, then U.S. high-yield issuers could see a surge in defaults. Even excluding the increase in interest costs, the mere fact that inflation continues to rise will weigh on corporate earnings. Inflation of 3% is easy for most junk-rated companies to handle, but 4% puts pressure on them, and reaching 5% “could trigger a full-blown wave of defaults.” (financial community)

05

Forex market expectations are generally stable

China’s foreign exchange market is expected to remain generally stable in August, Wang Chunying, deputy director of the State Administration of Foreign Exchange, told reporters. In August, the foreign exchange settlement and sales deficit of banks narrowed by 30% month-on-month, and the foreign exchange settlement and sales transactions of enterprises and other entities remained rational. From the perspective of major cross-border capital flow channels, the net capital inflow under trade in goods has maintained a relatively high scale, reflecting the resilience of China’s foreign trade development.

Steel trend analysis

01

Building materials: Price volatility was strong last week

Macro expectations are good, but the new construction area of real estate has declined steadily, the relevant favorable policies are mostly concentrated in the real estate completion end and the post-consumption stage, the weak recovery of steel demand, the peak season is not prosperous pattern, the market is under pressure, lack of confidence, and the price of building materials is expected to stabilize today.

02

Hot roll: The price volatility was strong last week

The cost end charge price is strong, iron ore is strong and volatile, coking coal continues to be strong, and the probability of short-term deep fall is not large, which directly pushes up the price of finished materials; The fundamentals of supply and demand are weak, gold is questioned, there is pressure on demand recovery, weak reality repress steel prices, and hot coil prices are expected to be stable and weak today.

03

Medium board: Last week’s price volatility was weak

The macro level is stable and good, a number of economic data marginal improvement, economic recovery is better, the policy bottom is becoming more obvious, supporting steel prices, but the fundamental pressure is obvious, production is at a near three-year high, the table needs to continue to decline, the contradiction between supply and demand continues, to be improved by new drivers, it is expected that the price of the board is weak today.

04

Tubing: Price volatility was weak last week

Cost side support is strong, high charge price operation, tube price bottom space is limited, but the traditional peak season demand is less than expected, market shipments and no significant volume, pipe price on the power is insufficient, seamless pipe mainstream stable, capacity utilization rate increased slightly, welded pipe to follow the market is tight, it is expected that pipe prices are stable today.

Material trend analysis

01

Coke: Prices were stable last week

The raw material end of coking coal continues to run strongly, squeezing the profit of coke enterprises, has reached the edge of profit and loss, and the price willingness is strong, but the downstream steel mill profit space is limited, the terminal demand for finished materials is slow to recover, the overall industry chain has insufficient confidence in the future market, whether it is to be seen, it is expected that the price of coke is temporarily stable today.

02

Billet: Last week’s price volatility was strong

The basic take-out volume and demand have increased, the supply side take-out volume has risen 2.50% week on week, the demand side has increased 13.53%, the social bank has transformed to the factory library, the cost side has strong support, the double coke and iron ore are difficult to fall in the short term, but the steel billet is more restricted, and the billet price is expected to be stable and weak today.

03

Iron ore: Prices were choppy last week

The replenishment before the long holiday led to the inventory recovery in the steel plant, the weekly volume of open port remains high and there is room for further rise, but the current iron ore price is at a high level, steel mill profits are squeezed, the replenishment is mainly based on just need, iron ore is more restricted, the short-term support below is strong, it is difficult to fall deeply, and it is expected that iron ore prices are high and volatile today.

Steel price forecast today

This week’s statistics of blast furnace operating rate and electric furnace capacity utilization have fallen, the high level of hot metal production has decreased slightly, the overall steel supply pressure has been slightly eased, and the total inventory has continued to decline. Cost side support is strong, drive is strong, coal mine security continues to be tight, iron ore fundamentals are relatively healthy, iron ore and double focus is difficult to fall, but demand improvement has a long way to go, there is still pressure, suppress steel prices, is expected to be weak price shocks today.

The content is for reference only and does not constitute investment advice.