Steel Market Forecast

On the foreign front, as countries take necessary isolation measures to control the epidemic, the global economy is shrinking, and there is great uncertainty about the severity and duration.

On the domestic front, the Political Bureau of the Central Committee of the Communist Party of China proposed six “guarantees”; the Ministry of Finance intends to further release 1 trillion yuan of local government special bond quotas in advance; 3.85%, the five-year LPR interest rate is reduced by 10 basis points to 4.65%), reflecting the continued increase in domestic macro policies.

On the one hand, under the current shortage of external demand, the government is making greater efforts to expand domestic demand, and the room and scope for macro policy development are also relatively large. On the other hand, the domestic real economy is still in the recovery stage, and it is difficult to return to the normal level in the same period last year in the short term. The chance of a retaliatory rebound in the property and auto markets in the second quarter is relatively small.

Fundamentally, steel demand rebounded sharply in the first half of April, and steel inventories accelerated to decontaminate. However, the recent demand performance is unstable, showing a situation where high-price transactions are not smooth and low-price transactions are better. At the same time, steel mills are generally marginally profitable, and production still has room to climb, which may drag down the speed of destocking. In the short term, the market is still cautious and steel prices may run volatile.