Why is China's steel market so hot

Why is China's steel market so hot? At present, the hot trend of the market is more stacked up by the good news of various policies, that is, the so-called "policy market". In particular, the following three policy messages have strong impetus to the rise of steel prices in this round:

First, China will suspend all activities under the telephone system of China Australia strategic economy indefinitely. Australia is one of the main sources of iron ore import for Chinese steel enterprises. After the release of the news, it was interpreted by the market as the shrinkage of iron ore supply in Australia in the later period, which was beneficial to the rise of ore price. Then there appeared the behavior of iron ore futures bull capital flowing into the market, and the iron ore price was quickly pulled up, breaking the historical high.

Second, the Ministry of industry and information technology announced the new version of "implementation measures for capacity replacement of iron and steel industry" on May 6. Compared with the old version, the new version has increased the replacement ratio and expanded the replacement scope, which is regarded by the market as "the new version of supply side structural reform of iron and steel industry". As a result, the market's expectation of reducing the supply of resources in the later period has been greatly strengthened, and the bullish sentiment is further rising.

Third, the novel coronavirus pneumonia in India is more stringent, and the demand for overseas recovery is superimposed. It is understood that India is the main source of cold rolling products in many European and American countries, and the expansion of the local epidemic has led to the downstream enterprises in many European and American countries to transfer their purchase orders to Chinese steel enterprises. Therefore, in the short run, China's steel export will still maintain a relatively high growth trend, and the possibility of large-scale return of export resources is not large for the time being. This will make the domestic market demand gap repair cycle caused by the "double carbon" (carbon peak, carbon neutral) policy be prolonged. With the help of the mismatch between supply and demand, the steel price has further increased.