Domestic steel price trend

Domestic steel market demand will maintain steady growth
The Central Economic Work Conference called for “policy efforts to be appropriately advanced”. From the perspective of the “troika” driving economic growth, consumption demand is relatively stable but susceptible to regional epidemic prevention and control of black iron steel pipe. After experiencing 21.2% growth last year, there is limited room for further growth in foreign trade exports. Investment plays a major role in stabilizing the overall economic market in the short term.

Chinese real estate development investment will gradually out of the trough. The Central Economic Work Conference clearly required that the city adopt policies to promote the virtuous cycle and healthy development of the real estate industry. The following policies and measures have been introduced: to improve the real estate financing environment, to steadily defuse the debt risks of some real estate enterprises in accordance with the legal principle, to exclude real estate M&A loans from the “three red lines”, and to lower the five-year quoted interest rate (LPR) by 0.05 percentage points. Investment in real estate development of mild steel tube is expected to remain flat year-on-year this year.

Under the requirements of moderately advanced infrastructure investment policy, the growth rate of infrastructure investment is expected to pick up. On the one hand, there is a guaranteed source of funds for infrastructure construction. The 1.2 trillion yuan of local government special bonds issued in the fourth quarter of last year will have an overlapping effect with the 1.46 trillion yuan of new special bonds issued in advance this year, boosting effective investment of rectangular hollow section. On the other hand, the 14th Five-Year Plan proposed a number of major projects focusing on the new development stage, including new energy, new materials, the Internet of Things, ultra-high voltage, digital and other new infrastructure projects, as well as a large number of new urbanizations, major transportation and water conservancy projects, regional coordination and connectivity and other infrastructure projects. Infrastructure investment growth is expected to pick up to about 6% this year, up 5.6 percentage points from last year, and the investment intensity in the first quarter and even the first half of the year is likely to be greater, with steel demand rising and then falling. Crude steel consumption in the domestic market is expected to be around 1 billion tons this year, up 1.6 percent from 990 million tons last year.

Steel production enterprises will still be in a high cost of operation
Steel production this year will be roughly the same as last year, but higher than in the second half of last year. With the further recovery of the world economy, overseas steel production of round steel pipe will continue to rise, and promote the demand for steel raw materials, while major international ore suppliers limited new production, the global iron ore supply and demand relationship is generally tight.