Will steel prices start rising again? What are the influencing factors?

Factors affecting steel prices

01 Blockage of the Red Sea caused crude oil to surge and shipping stocks to rise sharply
Affected by the spillover risk of the Palestinian-Israeli conflict, international shipping has been blocked. The recent attack by the Houthi armed forces on merchant ships in the Red Sea has triggered market concerns, causing many shipping companies to suspend the navigation of their container ships in the Red Sea. There are currently two traditional routes from Asia to Nordic ports, namely via the Suez Canal and via the Cape of Good Hope to Nordic ports. Since the Suez Canal is directly connected to the Red Sea, shipping prices have increased significantly.

According to statistics, international crude oil rebounded sharply on Monday, with Brent crude oil rising by nearly 4% for five consecutive trading days. The export of jet fuel and diesel from Asia and the Persian Gulf to Europe relies heavily on the Suez Canal, which leads to an increase in shipping prices, which in turn drives up the price of iron ore and coal. The cost side is strong, which is good for steel price trends.

02In the first 11 months, the total amount of new contracts signed by central enterprises increased by nearly 9% year-on-year.

As of December 20, a total of five central construction enterprises announced their newly signed contract values from January to November. The total newly signed contract value was approximately 6.415346 billion yuan, an increase of 8.71% compared with the same period last year (5.901381 billion yuan).

According to data, the central bank’s investment increased year-on-year, and the state’s supporting role in the property market remains strong. Coupled with rumors in the market today, the National Housing and Urban-Rural Construction Work Conference will be held tomorrow. Market expectations for policy-backed real estate have once again increased, boosting the futures market to rebound. The spot market price of steel has increased slightly, while steel companies have entered winter storage replenishment. In the raw material stage, steel mill inventories are still at a low level, and market cost support is still there, which is good for steel price trends.

It is expected that from 08:00 on December 20 to 08:00 on December 23, the daily minimum temperature or average temperature in the eastern part of Northwest China, Inner Mongolia, North China, Northeast China, Huanghuai, Jianghuai, eastern Jianghan, most of Jiangnan, northern South China, and eastern Guizhou will be higher than in history. During the same period, the temperature dropped by more than 5℃, with some areas in central and western Inner Mongolia, North China, Liaoning, eastern Huanghuai, Jianghuai, and northern Jiangnan falling by more than 7℃.

Since the beginning of winter, many areas have been affected by cold air. Most areas in the country have cooled down. Outdoor construction progress has been limited, reducing steel consumption. At the same time, it is the off-season for steel consumption. Residents’ fixed asset investment is expected to fall, and downstream terminal demand has fallen, suppressing steel prices. The rebound height is negative for the steel price trend.
comprehensive view

Affected by the upcoming housing construction and urban and rural work conference, optimistic expectations for real estate policies have once again increased, driving the operating sentiment in the futures market. Spot market prices have experienced individual rises and falls. In addition, iron ore and bifocal cost-end support is still there, and steel companies The winter storage and replenishment of raw materials has gradually entered the stage. The cost side is still strong. The ex-factory price of steel mills remains high. Considering that downstream terminal demand is still poor, the rebound of steel prices is suppressed. It is expected that steel prices will rise steadily tomorrow, with a range of 10-20 yuan. /Ton.

The end of the year is approaching. If you have plans or engineering projects to purchase steel pipes early next year, it is recommended that you arrange them in advance to avoid missing the deadline.

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