Source: China Securities Network Use mobile phones to view market information

Affected by the recent intensive introduction of various favorable policies at the macro level, steel prices have enjoyed a strong upward momentum. According to industry insiders, the macro policy level aimed at reducing capacity for steel and destocking policies aimed at real estate is beneficial to both ends of the supply and demand of steel; the central bank’s credit is greatly loosened, and industry funding is expected to improve; market inventories and steel mill inventories are significantly lower than In the same period last year, the supply pressure was not strong; the increase in the ex-factory price of steel mills and the increase in the price of raw materials have strengthened the support for steel prices by cost. Driven by multiple positives, the trend of rising domestic steel prices is expected to continue.

According to the agency’s comprehensive inventory monitoring data, as of February 19, the rebar inventory in 35 major markets across the country was 58.67 million tons, an increase of 779,000 tons, an increase of 15.31%; from the national wire rod, rebar, hot-rolled coil, In terms of the total inventory of the five major varieties of cold rolled coils and medium and heavy plates, the total national comprehensive inventory is 12.103 million tons, an increase of 1.266 million tons, an increase of 11.68%.

Analyst Qiu Yuecheng said that last week, the domestic steel market demand has not actually started, and the national steel inventory continues to rise sharply. However, the current inventory level is still 11.79% lower than the same period last year. The market inventory is mainly concentrated in the hands of steel mills and large agents. Traders' inventory is generally low. With the increase in construction sites after the Lantern Festival, terminal demand will gradually be released, and domestic steel market inventories are expected to be transferred to a downward channel after March.

Before the Spring Festival, the State Council successively issued opinions on the development of iron and steel and coal industries to resolve overcapacity and achieve relief from difficulties. The central bank and the China Banking Regulatory Commission issued new policies to lower the down payment ratio of mortgages. After the Spring Festival, the Central Bank, the China Banking Regulatory Commission and other eight departments issued several opinions on financial support for stable industrial growth and structural adjustment to increase efficiency. The Ministry of Finance issued guidelines on the injection of fiscal funds into government investment funds to support industrial development. The Central Bank, the Ministry of Housing and Urban-Rural Development, and the Ministry of Finance issued the Notice on the Formation Mechanism of Deposit Interest Rates in Housing Provident Fund Accounts. The Ministry of Finance issued the Notice on Adjusting Preferential Policies for Deed Tax and Business Tax in Real Estate Transactions.

In terms of funding, new RMB loans in January hit a record high of 2.51 trillion, and the scale of social financing reached a record 3.42 trillion, showing that the central bank's monetary policy is also accelerating loosening. Some analysts said that various policies for reducing capacity, destocking, stabilizing growth, and promoting investment have been introduced intensively. Although the focus of the policy is different from the 2009 "four trillion" stimulus policy, the degree of policy easing is somewhat similar. The introduction of these policies and measures have greatly strengthened market expectations and enhanced market confidence.

Institutional monitoring data shows that on February 21, the leading steel mills in East China issued price policies in late February. Shagang, Yonggang, and Zhongtian all raised rebar ex-factory prices by 50 yuan/ton, and wire rods and coils increased their ex-factory prices by 30 yuan/ton. , Which shows that steel mills are more optimistic about the outlook. The price of billet in Tangshan area rose sharply by 80 yuan/ton during weekends, and the ex-factory price of plain carbon billet was 1,720 yuan/ton, which has increased by 180 yuan/ton from 1,540 yuan/ton before the Spring Festival. The rise in raw material prices and the increase in the ex-factory prices of steel mills will further increase market expectations and boost the rise in steel prices.

Industry insiders believe that the current operating rate of domestic steel mills remains low, and the domestic market and steel mill inventories are significantly lower than the same period last year. With the start of terminal demand after the Lantern Festival, the market supply and demand situation is expected to be further improved. Before and after the Spring Festival, various policies for capacity reduction, inventory reduction, and growth stabilization were introduced intensively, which significantly boosted market confidence. The market is bullish and the short-term increase in steel prices is expected to continue.