Market outlook for november – steel prices expected to maintain resilience amidst fluctuations
Reflecting on the steel market trends in October, the overall steel prices showed a pattern of initial suppression followed by a rebound. While the comprehensive steel price index experienced a slight decline, the rebar and wire rod price indices both saw a rebound. On the other hand, the medium and heavy plates, hot-rolled coils, and cold-rolled coils price indices witnessed a modest decrease. In terms of raw materials, the 62% grade iron ore prices rebounded by $4 per ton, surpassing expectations.
As we step into November, the steel market is anticipated to continue its balance between expectations and reality. Recent indications suggest that steel prices may exhibit a tendency towards strength within the ongoing fluctuations.
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Factors Influencing the Market:
Positive policy developments boost market sentiment: recent resolutions from the 6th session of the 14th national people’s congress standing committee have injected optimism into the market. The decision to issue special bonds worth ¥1 trillion in the fourth quarter of this year, exclusively for local governments, is expected to positively impact infrastructure projects. This substantial boost in infrastructure investment is deemed to significantly favor the steel industry, enhancing market confidence. Experts believe that this positive sentiment could lead to a sustained rebound in steel prices for a considerable period. The issuance of special bonds typically involves a seven-step process, with the impact on steel demand likely to be felt in November.
Mixed Signals from Economic Indicators: despite some recent improvements in macroeconomic indicators, the sub-index for the production and operational activity expectations of enterprises in the steel industry, as reflected in the October Purchasing Managers’ Index (PMI), saw a decline of 6.9 percentage points, approaching the boom-bust line (50%). Consequently, after the release of positive sentiment, the steel market is expected to return to the fundamentals of supply and demand.
Intensified tug-of-war in the steel market fundamentals: while China’s crude steel production has seen a consecutive three-month MoM decline, pig iron production remains at high levels. As of October 26, the weekly average daily production of pig iron for 247 steel companies nationwide maintained a relatively high level of 2.4273 million tons, with the weekly production of the five major steel products at 12.6994 million tons. Despite the noticeable contraction in steel companies’ profitability, there is still no significant intention to cut production. Experts estimate that the average daily production of pig iron in November will reach 2.399 million tons.
On one hand, the ministry of ecology and environment has recently mandated that localities must not arbitrarily issue heavy pollution weather warnings, raise warning levels, or extend warning response times, using the achievement of air quality improvement goals as a pretext. This regulatory shift is expected to significantly reduce disturbances to the supply side of the market due to comprehensive air pollution control measures, with limited impact on the degree of supply reduction.
On the other hand, against the backdrop of various regions vigorously striving for economic development, demand resilience persists. Although seasonal pressure on demand is anticipated, some areas are still in the midst of a rare construction season. With the backing of monetary and fiscal policies, it is predicted that steel demand in certain sectors will further improve.
Researchers emphasize the need to closely monitor the influence of major conferences on market dynamics. Events such as the central economic work conference, the federal reserve interest rate meeting, and the upcoming Asia-Pacific Economic Cooperation (APEC) summit can impact market participants’ sentiment and expectations, potentially influencing steel prices in the coming months.
Overall, In November, driven by favorable policies and a series of events, steel prices are expected to maintain a tendency towards strength amidst fluctuations. Therefore, it is recommended that customers arrange their purchasing plans reasonably. If you need pipeline system products, please feel free to contact Haihao Group for help.