Inventory pressure is gradually emerging, steel market is not confident enough to wait for demand to exert force
Although the market temporarily stopped the impact of the market decline caused by the negative impact of US CPI data and interest rate hikes, black futures rebounded slightly overnight to correct the market. However, the market mentality is still unstable, and there are many people who have different views on the market outlook, which has caused the current market to be both cautious and confused. At present, steel mills also intend to control shipments to avoid squeezing the weakly balanced supply and demand in the market.
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However, due to the slow improvement in demand, the production of hot metal and crude steel has increased continuously since September, causing inventory pressure to appear. In the first ten days of September, the steel inventory of key iron and steel enterprises was 17,064,500 tons, an increase of 7.03% month-on-month; compared with the same period of last month, the beginning of the year and the same period last year, it was in an increase, of which 5,767,600 tons increased from the beginning of the year, an increase of 51.06%, compared with last year. In the same period, it increased by 3.7407 million tons, an increase of 28.08%. It has come to the peak demand season, but the increase in inventories still has a certain pressure on market confidence, and demand expectations are constantly weakening, resulting in insufficient motivation for price increases.
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In the context of the European energy crisis, coal safety inspections and price hikes for imported coal, there may be limited room for coal coke prices to continue to fall. Therefore, steel profits have improved, and demand-driven steel price increases still need to be reversed.
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From the current point of view, the fundamentals are weak. With the increase in inventory, the pressure on the psychological expectations of the fragile steel market in the case of low demand increases, which is not conducive to prices. This year’s low demand situation has advanced slightly, but this is not the main logic of the continued decline in the market. The spot still needs policy implementation and demand verification, and the raw materials are too strong.