The total grain PMI index of the steel circulation industry in August 2019 released by the Lange Steel Cloud Business Platform was 47.7, down 2.2 percentage points from the previous month. From the classification index, the 10 sub-indexes that constitute the PMI of the steel circulation industry are reduced by 3 liters and 1 level. Among them, the sales volume, sales price, total order quantity, purchase cost, trend judgment and purchasing intentions are falling again. The inventory level and financing environment have rebounded.
In August, the sales volume index and order index of steel circulation enterprises were 43.7 and 43.6 respectively, down 4.8 and 4.7 percentage points respectively from the previous month, both of which fell in the contraction interval, indicating that the market procurement demand is still in the off-season, compared with last month. Weakened, mainly due to the apparent weakening of direct supply orders for terminal purchases.
In August, the inventory index of steel circulation enterprises was 50.6, a slight increase of 0.6 percentage points from the previous month. From a regional perspective, the inventory indices of the Central South, Northeast and Northwest regions rebounded rapidly, at 2.1, 1.8 and 1.1 percentage points respectively. In terms of scale, the proportion of sample enterprises with annual sales of more than 1 million tons and annual sales of steel exchange enterprises with an annual sales volume of 100,000-500,000 tons is increasing, while annual sales are between 5 million and 1 million tons and below 100,000 tons. The proportion of increase in inventory of steel circulation enterprises is declining, indicating that the resources of the circulation market have changed from relative dispersion to relative concentration in the previous period. In terms of absolute quantity, although the steel social inventories have been declining for two consecutive weeks, the decline in inventory is still less than expected, making the steel social inventories still higher than last month, and the late destocking pressure is still relatively large. According to the market monitoring of Lange Steel Research Center, the steel social inventories of 29 key cities nationwide in August still increased by nearly 200,000 tons from last month.
According to the leading index, the steel purchase industry’s purchasing willing index in August was 48.7, down 1.2 percentage points from the previous month. The trend judgment index is 49.2, returning to the contraction interval again, down 2.0 percentage points from the previous month, indicating that the sample companies are more entangled in the market outlook, and the joys and sorrows are mixed. The happy season is the upcoming demand season. Sadly, supply and inventory pressures still exist. As a result, sample companies are more cautious about maintaining their willingness to purchase later.
In August, the steel market continued to fluctuate and continued to decline. Although the environmental protection and production restriction policy was continuously introduced, it still failed to stop the steel market down. The steel market was approaching the end of the traditional peak season and the impact of a new round of environmental protection and production restrictions. Next, there is stability.
Supply side: In the first 7 months, the average daily output of crude steel was maintained at an average of 2.7 million tons. The average daily output of crude steel in June was 2.918 million tons, a record high. The average daily output of crude steel in July was 2.749 million tons. The reduction of 169,000 tons. Although the environmental protection and production restriction policy continued to strengthen in August, but the effect was weakened, it is expected that the average daily output of crude steel will rebound.
Demand side: At present, the steel market is in a stage of alternating prosperity. Although the downstream demand has begun to recover, the steel social inventories have been declining for two consecutive weeks, but the downstream demand is not obvious. The early market expects the demand in mid-to-late August. The expectation of improvement has been frustrated, which makes the spot merchants more entangled in the market outlook. At the same time, as the 70-year celebration is approaching, regional site stoppages and logistics restrictions will cause a “vacuum period” for downstream demand; and the recent policy on the real estate market. Constantly tightening has also led to an increase in the uncertainty of demand for steel for real estate during the year, and there is still room for recovery in demand for infrastructure steel. Demand for steel for the manufacturing industry will be differentiated, and demand for steel for the automotive industry will decline. Demand for industrial steel will maintain steady growth, and demand for steel for the appliance and marine industries will remain stable.
The steel industry’s prosperity in September will be weaker than that in August, mainly because the continuous decline of steel prices in August has a greater impact on the market mentality, but the steel market is still concerned about the implementation of environmental protection and production restrictions. At the same time, with the arrival of the peak season of demand, the volume of downstream demand will directly affect the rebound of the steel market in September. The steel market will gradually step out of the off-season demand, and the overall steel market will be weak and accompanied by a phased rebound.
Post time: Sep-03-2019