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The trend of scrap steel falling price may not continue

Release time:

2023-01-30 15:27

The price drop came as a surprise. When the steel market went down one after another, when Tangshan billet fell by 100 yuan/ton, scrap steel began to fall by 30-100 yuan/ton, and the mood of "rising and rising" was not satisfied, so it was poured cold water on the spot.

The scrap steel market has always been "selling down and not selling up". Since the fall in price, the quantity of goods delivered everywhere has been sufficient, especially in East China, where most steel mills have been heavily pressed; In the atmosphere of Tangshan steel billet plummeting by 100 yuan/ton, steel enterprises were elated and justified to significantly reduce the purchase price. According to Jin Lianchuang, at present, the overall inventory level of scrap steel in steel plants is not too high, and the situation of each plant is quite different. The scrap steel consumption is from 4 days to 1 month, so who gives the confidence?

The most obvious factor is environmental protection and limited production. Recently, all parts of the north have successively issued detailed measures for comprehensive air control in autumn and winter; Shanxi, Handan, Xingtai, Shijiazhuang and other places have already started to limit production. However, because only sintering production is limited, and Tangshan, the "leading figure", has not taken any action, the market has not fluctuated significantly, and the scrap purchase has not changed significantly. Since September 25, Tangshan has started to limit the production of pellet shaft furnace and sintering machine by 50%, and the mentality of merchants has obviously weakened.

According to Jin Lianchuang, the above practice of restricting sintering production in the short term will not affect the production and even the purchase volume of enterprises. Especially, many steel plants have prepared enough raw materials such as sinter in advance. However, if the production is limited for a long time, especially in the heating season, the sintering inventory of steel plants is gradually exhausted (lump ore cannot completely replace sinter), which will inevitably cause a series of negative pressure from purchase to production; In addition, according to the latest news, Handan has determined that the blast furnace production of each steel plant is limited by 50%, and the implementation date is from October 1 to March next year. Based on the consideration that the production limit will continue to be implemented to the end in the heating season, some enterprises have begun to reduce the purchase volume, and a few enterprises have begun to stop the production from time to time.

The most direct factor is no shortage of scrap steel. Because merchants are reluctant to sell, scrap steel tends to be out of stock as the price rises. In fact, due to the ban of medium frequency furnaces this year, a large number of scrap resources are surplus, especially light scrap. Although long process steel mills have increased the amount of scrap since the second quarter, it can not completely fill the gap of scrap market demand caused by the "disappearance" of medium frequency furnaces; The social volume of scrap steel resources is very large. Once the price falls, the number of steel mills arriving will increase.

The most fatal factor is the insufficient demand for steel. The real estate of large steel users has passed its heyday, and although the investment in infrastructure continues to develop, due to the long time limit and the large supply of steel in China, it has not produced a strong boost to steel consumption. The demand for steel has been at a low level in essence; Recently, many places in the north have issued the policy of stopping construction sites for 4 to 6 months in autumn and winter, and the demand for construction steel is expected to fall sharply, which coincides with the National Day and the Mid-Autumn Festival. In order to avoid the risks after the festival, the steel shipments have been intensified, and the steel price decline is difficult to change.

This round of scrap price decline can be said to be a beautiful "blocking war" waged by steel mills in combination with environmental protection policies in a timely manner, and scrap steel will be perfectly pocketed at a low price. From the current situation, there is no room for scrap steel to rise temporarily, and it is difficult to break the high price in the early stage. However, it also depends on the actual implementation of the later production restriction policy. However, on the premise of a slight improvement in the downstream steel market, the price of scrap steel has fallen to the psychological bottom line of most merchants, and the arrival of goods in some regions has begun to decrease, and the space for further decline in the short term may be limited.