June steel PMI shows: the off-season is coming?
2024-07-03 13:46:11
Steel Logistics Committee of CIFT
From the steel industry PMI (Purchasing Manager's Index) investigated and released by the Iron and Steel Logistics Committee of CFLP, with the rising temperature, the off-season characteristics of the iron and steel industry gradually appeared, and the PMI in June was 47.8%, a drop of 2 percentage points from the previous year, ending the rising trend for 2 consecutive months, reflecting the industry's pressure slowed down. Changes in the sub-index shows that in June, the steel market supply and demand have fallen, raw material prices fell in the short term, steel prices continuously downward, but the steel mill profits have been repaired. It is expected that in July, the market demand may rebound slightly, steel mill production rebounded slightly, raw material prices weak shock, steel prices rose slightly.
Demand for steel weakens
Overall still have stabilisation basis
In June, the demand for building materials market showed the characteristics of the off-season, part of the high temperature, rainy areas affected by the demand is relatively obvious, but benefited from the national stable economic policies continue to force, market demand is expected to remain stable. In particular, the real estate market policy optimisation and infrastructure construction is steadily advancing, to the steel industry demand is expected to bring some boost. In addition in terms of funding, the first half of this year, the domestic currency investment in a relatively loose situation, the liquidity of the commodity market improved, but also to the steel market to bring some support. New orders index of 49.4%, down 0.2 percentage points from May, although still below 50%, but still a better level since the beginning of this year, showing that the market demand for the steel industry in June, although there is a turn for the worse, but compared to see there is still a basis for stabilisation. Market end demand, from the monitoring of the Shanghai terminal wire screw procurement data, in June, Shanghai terminal purchases fell slightly by 7%, there is a certain contraction, but compared with the same period last year, there is still a small increase.
Steel mills' inventories rise continuously
Steel mills' production declined
In June, with the arrival of the low season in the steel industry, the release of downstream demand has slowed down, and the inventory of steel mills increased continuously. Data from the China Iron and Steel Industry Association showed that the steel inventory of key steel enterprises was 16,086,200 tonnes in early June, an increase of 1,519,400 tonnes from late May. By the middle of June, the steel inventory of key statistical iron and steel enterprises was about 16,425,800 tonnes, an increase of 339,500 tonnes from the first half of June. Finished goods inventory index was 47.4%, up 4 percentage points from May, the second consecutive month-on-month rise.
In the case of inventory increase, market demand growth slowed down, the enterprise production willingness has weakened, June's production index was 45.9%, down 4.7 percentage points from May, once again fell into the contraction zone. According to the Steel Association statistics, in the first half of June, the country's key statistical iron and steel enterprises daily output of 2.2483 million tons of crude steel, an increase of 3.3%; daily production of 1.98939 million tons of iron, an increase of 3.03%; daily production of 2.11996 million tons of steel, a decline of 5.26%. By the middle of June, the national key statistical steel enterprises daily output of crude steel 2,185,100 tonnes, down 2.81%; daily production of 1,960,100 tonnes of iron, down 1.46%; daily production of 2,098,000 tonnes of steel, down 1.02%. Combined, in June, the overall steel production than in May fell not much, the month of production showed a certain momentum of decline.
Raw material prices fall in the short term
Steelmaking costs fell significantly
Raw material prices fell in June due to production curtailment and overall weakness in the raw material market, coupled with a rise in raw material prices in the previous period leading to a continuous rise in the base, the purchase price index was 38.6% in June, down 38.9 percentage points from May, a rapid decline after two consecutive months of sharp increases. By category, the iron ore market weakened under pressure, with supply and demand conflicts further highlighted, causing prices to fall sharply. Coke market turnover is general, the overall supply is relatively stable, prices and steel profits show synchronous trend, prices fell slightly. Scrap steel market performance is stronger than other black varieties, reverse invoicing impact gradually spread, for scrap steel prices to provide stronger support. Overall, the current cost of steelmaking than in May has dropped significantly.
Continuous downward movement of steel prices
Steel mill profits have been repaired
In June, affected by the contradiction between supply and demand, steel prices continuously downward, the price of the whole month almost no recovery trend. Shanghai rebar price index shows that on June 3, the price of 3570 yuan / tonne, for the highest point in June, since then the price continuous downward, June 25 fell to 3420 yuan / tonne, for the lowest point in June. 150 yuan / tonne drop in June the whole month, almost since the beginning of this year's lowest point. Although steel prices fell in May, but the current cost of steelmaking also fell significantly, conducive to the repair of steel mill profits. Data show that in June, the profit of all steel varieties have increased, including cold rolled steel plate tonnes of steel profit increased by 103 yuan / tonne to 32 yuan / tonne, medium plate tonnes of steel profit increased by 88 yuan / tonne to 16 yuan / tonne.
Demand in the steel market may rebound slightly in July
In July, the steel industry's traditional consumption off-season is expected to continue. Although temperatures continue to rise around the world, the widespread rainy season in the south will gradually end, and demand suppressed by rain may rebound slightly. Policy support and a steady rebound in market demand provide certain positive signals for the industry. It is expected that in the second half of the year, as the effects of policies such as the special national debt, large-scale equipment renewal and consumer goods trade-in gradually emerge, the rebound momentum of the steel industry will be further strengthened. It should be noted that the current with the optimisation of real estate policies around the stage of real estate transactions have some recovery, but the overall is still in the doldrums. In the long run, the real estate industry is still relatively prominent, especially the end of the demand for housing is difficult to match the current relative excess supply, so the follow-up of the overall real estate start is hardly optimistic, the support of the demand for the steel market can not be expected to be too high. Steel market demand should pay more attention to infrastructure, manufacturing and so on.
Steel production may pick up slightly
In July, the production restriction rumours of disturbance and higher inventory pressure for enterprise production enthusiasm or will have some impact, but in the case of profit recovery and demand rebound is expected to still have enterprises to strengthen production activities. Steel production is expected to pick up slightly in July.
Raw material prices are expected to be low shock, steel prices or a small rebound. The current port iron ore stocks are still high, overseas iron ore supply is stable, iron ore prices rebound power is insufficient, coke and scrap performance is not enough to hedge the poor performance of iron ore, the overall raw material prices will continue to be low shock. Steel prices have been close to the lowest point since the beginning of this year, the market continues to decline in the power is insufficient, coupled with the demand in July or will pick up slightly, steel prices are also expected to rebound slightly.