How to get to the steel market in August? The trader said so

The volatile market environment and significant drop in steel prices in July have significantly weakened the mentality of traders.

According to Lange Steel Network statistics, in July, the average price of third grade threaded steel (Φ 25mm) in the top ten key cities in China dropped by 302 yuan/ton, a decrease of 8.28%; The main contract for rebar has fallen from the 3600 point mark to the 3300 point mark, with a cumulative drop of up to 318 points, a decrease of 8.79%.

Decreased shipment volume, low willingness to bargain

Market trading volume is also decreasing in sync with steel prices. During the interview, traders generally reported that the recent shipment situation has been poor, and overall demand has shown a downward trend this year.

Yang Mingxia, the general manager of Beijing Zhiheng Tongda Trading Co., Ltd., stated that the company's recent shipment situation has not been good, and it is evident that there has been a decline in the amount of goods received at construction sites this year. At the same time, there are currently no major or special construction projects like the "Xiong'an New Area" in terms of infrastructure, making it difficult for demand to increase significantly in the later stage.

Xing Na, General Manager of Beijing Jinnahe Trading Co., Ltd., and Han Chao, Deputy General Manager of Beijing Zhongtian Shengheng Trading Co., Ltd., also stated that the recent shipment situation is average, and the demand is significantly lower than last year. Currently, the company has proactively reduced inventory to focus on stability.

The current steel price is at its lowest level since 2021. Is there speculative demand in the market? Han Chao said that some people wanted to buy stocks before, but they only bought stocks halfway up the mountain, and now basically no one is proposing to buy stocks again. At present, it is expected that there will be less speculative demand in the market until there are no obvious signs of a rebound.

Xing Na said that although steel prices are currently at a low level, there is basically no speculative demand in the market because the current market resources are mainly old national standard rebar. On September 25th, the switch between old and new national standard rebar will be made, so now everyone is unwilling to actively hoard old national standard rebar resources.

The impact of the transition between new and old national standards on the market

Traders have also given different opinions on the impact of the switch between the new and old national standards for rebar on the market. Xing Na said that there is no need to worry too much about the switch between the new and old national standards for rebar. Currently, there are about 7 million inventory of rebar according to the old national standards in China, and the apparent demand is about 2 million tons per week. Even if the demand does not increase, all the rebar according to the old national standards can be consumed within a month, so the market does not need to panic too much.

Some traders believe that some steel mills have been producing the new national standard rebar since July and will gradually release it to the market starting from August 1st. For traders with small inventory and fast sales in the early stage, they can quickly replace all inventory with the new national standard; For traders with large inventory and slow sales, the later sales pressure will be even greater. Therefore, it cannot be ruled out that there may be a situation of low-priced dumping in the market.

Can the steel market bottom out and rebound in August

Regarding the later market trend, Xing Na stated that there are currently reports in the market that steel mills such as Chenggang and Jingye will reduce their investment in the Beijing market in August. At the same time, with the improvement of the climate, demand is expected to rebound, which is conducive to alleviating market supply and demand pressure. In addition, with the market unanimously bearish, the market is likely to turn the tide, so steel prices in the Beijing Tianjin Hebei region may rebound in August.

However, Han Chao is not optimistic about the market in August. He believes that the current market confidence is insufficient, and the construction actions in the second half of the year are not yet obvious. The demand situation is average, and the overall market supply and demand pressure is still relatively high.