Analysis of Price Trends of Chinese Steel in October November 2024

Steel prices fluctuated in October, causing the black sector to resonate with macro and fundamental factors. At the end of September, there was a significant change in macro policies at the Politburo meeting, which was highly targeted and clear, focusing on the real estate and stock markets. Steel prices continued to rise, and futures led to a rebound in spot prices. The export growth rate is significant. In September, China exported 10.153 million tons of steel, an increase of 658000 tons from the previous month and a month on month increase of 6.9%; From January to September, the cumulative export of steel reached 80.711 million tons, a year-on-year increase of 21.2%. The top exporting countries are mainly Vietnam, South Korea, and the Philippines.

Strategic viewpoint

On a macro level, expectations of overseas interest rate cuts have slowed down, and the outcome of the US election is facing uncertainty. Domestically, continuous efforts are being made to update equipment and exchange old appliances for new ones, and the incremental policy has entered the stage of implementation, which still has positive momentum.

On the supply side, the increase in supply has slowed down, and molten iron is about to peak. The profits of steel mills have declined compared to the previous period, and the resumption of production is coming to an end. Under limited increment, the demand for iron ore and coke is under pressure.

In terms of demand, there has been a marginal improvement in project funding and actual demand, and policy expectations have also provided some support. With the weather turning cold and poor construction conditions, the demand for building materials is entering a off-season. Under policy promotion, the production of household appliances in the manufacturing industry is still acceptable. In terms of exports, the price advantage still exists and will remain high in the short term. We are concerned about the impact of overseas trade sanctions and the US election on foreign trade.

In terms of inventory, the increase in production of hot coils is not as significant as that of threads, and the inventory consumption ratio continues to decline. The supply and demand of threads have improved, and the inventory consumption ratio has decreased.

Looking ahead to November, the macro government provides favorable support for steel prices, but there is a trend of weakening fundamentals.