After the Spring Festival, China's steel price is likely to be a "red door". "Historical data show that in the 10 years since 2009, steel prices in the first week after the Spring Festival have increased to varying degrees compared with those before the festival. The range and length of the increase are uncertain, but they are not necessarily related to the stock level in the first week after the festival." The strength of supply and demand affects the trend of steel price.
By analyzing the trend of steel price before and after winter storage in 2016-2018, it can be found that the steel price increased by 23% and 19% respectively after winter storage in 2016 and 2017. The reason is that the gross profit of low-ton steel during winter storage leads to low production, and the real estate and infrastructure are in an upward investment cycle after the festival, and the demand is strong. After the winter storage in 2018, steel prices fell by 15%. The reason is that during the winter storage period, high production and high storage mood, large stock accumulation, lagging recovery after the festival, a large number of inventories led to panic selling by steel traders.
According to the model, the post-holiday inventory peak is 2.11 million tons, which is between 2016 and 2017. With the rebound of infrastructure investment, demand resilience will continue until the first half of this year. It is expected that the rate of inventory decomposition will reach 435,000 tons/week in March, which is significantly faster than the same period in 2018 and the same as the same period in 2017. Steel price is expected to continue to rise in the case of lower total winter storage stocks and faster decomposition.
Just like you, 70% customers choose long-term cooperation with BBN steel not only for our good product and service quality, good reputation in the international market, but also for our experienced one-stop raw material supply and further steel processing!
