Looking forward to the Chinese steel market in July 2020

On the demand side: Affected by the rainy season in the south, the steel demand in the short term is still weak, and concerns about the risks of the international financial market will also affect the enthusiasm of downstream purchases. In the medium term, the demand for steel may improve in stages after the South China out of the plum rain season. In July, domestic steel demand may be low before high, and external demand may remain weak.

Supply: According to market research, the utilization rate of blast furnace ironmaking capacity of 247 steel mills last week was 93.42%, and the average operating rate of 71 home appliance arc furnace steel mills nationwide was 74.44%, both hitting new highs this year. On the one hand, the electric furnace factory is currently in a state of profit or loss or marginal profit. With the further decline in steel prices, some electric furnace factories may actively reduce production. On the other hand, after the end of the rainy season in July, high temperatures will be ushered in, and steel mills may undergo routine maintenance, and it is expected that steel production will decrease slightly in July.

In terms of inventory: According to market research, the stock of sample steel mills last week was 6.2301 million tons, an increase of 258,800 tons week-on-week; the social stock of steel products was 14.3271 million tons, an increase of 92,800 weeks-week-to-week; the total steel inventory was 20.53 million tons, an increase of 379000 tons on a weekly basis, the first recovery in 15 weeks.

In the short term, the demand for steel is weak, steel production is at a high level, steel stocks are deteriorating, and steel prices may still have downward pressure. In the mid-term, domestic demand for steel products may improve after the South China out of the plum rain season. With the routine maintenance of steel mills, steel prices do not rule out the possibility of a staged rebound. In July, steel prices are expected to be low before high, with little room for ups and downs.