Manufacturing PMI recovers! CMI Index hit a five-year low!

Today’s Guide 

1. Manufacturing PMI has picked up slightly for two consecutive months
2. Support rigid and improved housing demand
3. In-depth implementation of home appliances to replace old, strengthen the recycling of waste home appliances

First, macro news

1. Manufacturing PMI has picked up slightly for two consecutive months

According to the data released by the National Bureau of Statistics, in July, the manufacturing PMI rose slightly for two consecutive months, and 10 of the 21 industries surveyed were in the expansion range, an increase of 2 over the previous month, and the overall level of manufacturing prosperity continued to improve. Among them, the main raw material purchase price index rose to the expansion range, and the overall level of raw material prices for manufacturing production increased.

2. Support rigid and improved housing demand

The State Council forwarded a notice from the National Development and Reform Commission on measures to restore and expand consumption. It is proposed to support rigid and improved housing demand. We will do a good job of ensuring the delivery of housing, ensuring people’s well-being, and ensuring stability, improve the basic system and supporting policies for ensuring housing, expand the supply of low-income rental housing, and strive to solve the housing problems of new citizens, young people and other groups with housing difficulties.

3. In-depth implementation of home appliances to replace old, strengthen the recycling of waste home appliances

The State Council forwarded a notice from the National Development and Reform Commission on measures to restore and expand consumption. It is proposed to promote intelligent home appliances, integrated home appliances, functional furniture and other products to improve the level of green home intelligence. We will accelerate the implementation of actions to improve after-sales service for home appliances. We will carry out in-depth exchanges of old household appliances for new ones and strengthen recycling of used household appliances.

4. July China construction machinery market index hit a new low of nearly five years

The latest data show that in July 2023, China’s construction machinery market index, or CMI, was 85.72, down 11.22% year-on-year and 6.26% month-on-month. According to the CMI judgment criteria, the index continued to be below the contraction value of 100 in July, and the market sentiment was more pessimistic, the decline may be intensified, and the accumulation of downside risks in the market was vigilant.

5. SCFI returned to the thousand points, the peak season effect of the container market finally appeared

Shanghai export container freight index (SCFI) rose last week, up 62.78 points to 1029.23 points, which is the SCFI index after falling below the previous point in mid-April for the first time back to the thousand point level, a weekly increase of 6.5%, the largest weekly increase in nearly a year. The three major long-term lines have rebounded, and the European line has risen by more than 30%, and the peak season effect has fermented.

Second, steel trend analysis

1. Building materials: yesterday the price was stable and weak

Thread price wide volatility, market sentiment is more affected, the macro level of real estate policy is expected to be loose, many cities to loosen the property market, but the policy landing to the amount of steel still needs time, the realistic demand release is limited, driven by expectations, the cost side is still supported, it is expected that prices will be stable today.

2. Hot roll: Yesterday prices were mixed

Manufacturing PMI picked up slightly for two consecutive months, the prosperity level continues to improve, the expectation is good, coupled with the previous favorable frequency, the overall atmosphere is warm, but the current demand is still off-season, the table needs to release limited, there is a “temperature difference” between macro expectations and realistic trading, and it is expected that the price will be stable today.

3. The middle board: yesterday’s price was stable and weak

Macro level expectations continue to rise, the shipping industry is stable and good, the high growth of fixed investment in transportation, the superposition of crude steel flat control, the market expectations are sufficient, but the fall in the cost side is also affecting the market sentiment, dragging down the steel price, the falling power is insufficient, the continuous game, the price is expected to be stable today.

4. Pipe: yesterday the price held a steady rise

Off-season demand is difficult to repair a large area, the upward pressure is greater. Seamless pipe billet slightly increased, pipe factory inventory pressure relief, strong willingness to support prices, stable prices mainly shipped; The welded pipe as a whole is stable, individual areas have a slight increase, but the strip price has fallen, and the wait-and-see sentiment in the market is strong, and the price is expected to be stable today.

Third, raw material trend analysis

1. Coke: yesterday the price stable operation

Coke enterprises have not yet got rid of losses, limited profits, enthusiasm to start work is not high, low inventory in the factory coupled with coal extrusion profits, coke enterprises are willing to raise prices, Shandong, Xingtai opened another round of coke increase, the margin of 100-110, steel mills limited profit space, coke steel continued game, is expected to temporarily stable prices today.

2. Billet: yesterday the price stable operation

The market wide shock, the market mentality is unstable, the release of downstream steel billet demand is limited, coupled with many heavy rains, shipments are blocked, the market sentiment is difficult to boost, but under the crude steel pressure reduction expectation, the supply is expected to narrow, superimposed recent cost increases, the bottom support is strong, it is expected that the price is stable today.

3. Iron ore: Yesterday’s price stable operation

The futures price holds the green shock, the level control policy is introduced, the market sentiment is not good; The supply and demand of the industry are both weak, the supply side is more affected by the typhoon, the demand side of the steel mill hot metal peaks and falls, there is still short-term support, but the replenishment falls significantly, the downward pressure is larger, and the price range is expected to fluctuate today.

Fourth, today’s steel price forecast

Manufacturing PMI picked up slightly, the degree of prosperity increased, the macro positive signal frequency, the crude steel reduction policy was gradually implemented, and the market expectation was stable and good; Although the cost side is affected by the crude steel pressure reduction, the spot of coking coal is running strongly, the fourth round of coke increase is opened, the iron ore is temporarily high, the steel price is still supported in the short term, and the overall is easy to rise and fall, considering the limited release of realistic demand, high temperature and heavy rain frequently, the upward pressure still exists, it is difficult to achieve it overnight, and it is expected that the price will be stable today.