In mid-September, the Federal Reserve raised interest rates again by 75 basis points, and the global commodity and financial markets fluctuated violently, causing domestic steel futures and spot prices to follow suit. In the second half of the year, with the landing of bad news, the downstream enterprises stocked up and replenished their warehouses before the holiday, and the futures prices of rebar and hot coil stopped falling and rebounded, which led to a slight rise in spot prices.

The "Golden Nine" in the domestic steel market ended flat, can you expect the "Silver Ten"? At the end of September, the macroeconomic policies were frequently blowing, and the external environment was complicated and confusing. In the first two days of the long holiday, the steel market transactions were light and prices were stable. Will steel prices continue to fall or rebound in October? The following three aspects are analyzed.

1. Domestic steel inventories dropped sharply

Supply pressure has eased

According to the inventory data monitored by Nishimoto Information, as of September 29, the total inventory of major domestic steel varieties was 10.4563 million tons, a decrease of 987,000 tons or 8.6% from the end of August, and a decrease of 2.5187 million tons or 19.4% from the same period last year. . Among them, the stocks of rebar, high-speed wire, hot coil, cold-rolled and medium and heavy plate were 4.5672 million tons, 1.1255 million tons, 2.3424 million tons, 1.3147 million tons and 1.1265 million tons respectively. In September, the inventories of the five major domestic steel varieties all showed a downward trend, among which the inventories of rebar and hot coils fell sharply.

The main reason for the decline in steel inventories at the end of September is that the inventories of downstream steel-using enterprises have been running at a low level since the third quarter, and the amount of replenishment purchases before the holiday is large. According to statistics, last Thursday, the volume of construction steel in the major domestic steel market reached 276,000 tons, the highest sales record this year.

In October, transactions in the steel market have calmed down again, and inventories will continue to decline to a limited extent. Moreover, the first wave of strong cold air this year after the holiday will infest most parts of the country. The northern region will usher in cold weather, and the demand for steel on construction sites will gradually decrease. , steel inventories will also slowly increase.

2. The North of China may implement partial production restrictions

Steel mill operating rates expected to fall

According to data released by the China Iron and Steel Association, in mid-September 2022, key statistics iron and steel enterprises produced a total of 21.4503 million tons of crude steel, 19.6784 million tons of pig iron, and 20.9789 million tons of steel. Among them, the daily output of crude steel was 2.145 million tons, an increase of 2.23% from the previous month.

Beginning in October, the northern region is about to enter the annual production restriction period. It is expected that the production restriction requirements will be more stringent in October this year, the operating rate of the blast furnace of steel mills will drop slightly, and the crude steel output will have a high probability of peaking and falling.

3. Coking coal prices continue to be firm

Steel raw material cost support is obvious

In October, after the northern region entered the production restriction period, not only the production of iron and steel enterprises, but also the production of coal and coking enterprises will be restricted to varying degrees. Tensions have yet to ease.

At the same time, the Daqin coal transportation line will be overhauled in autumn from September 28 to October 22. It is expected that the daily shipment volume will be reduced by about 150,000 tons, and the transportation of coking coal and coke will be affected.

Last Friday, a coking enterprise in Inner Mongolia proposed to increase the ex-factory price of coke by 200 yuan / ton, but has not yet received a response from the steel mill. However, coke prices are easy to rise and hard to fall in October, which will form a clear support for the ex-factory prices set by steel mills.

Through the analysis of steel inventory, steel mill supply and coke cost of steel raw materials in October, it can be found that the supporting role of steel prices from the supply and cost sides is real and difficult to change.