China steel market will be better than expected in Spring this year

The so-called spring market refers to the steel market price in February to April after the Spring Festival. Influenced by many factors, if there is no major accident, the national steel market is expected to be better than expected in spring in 2019.

First, the arrival of the peak demand season may be ahead of schedule because of the heavy downward pressure of the economy.

Second, pre-season inventory is relatively low
At present, Traders' steel "winter storage" is still cautious, and the level of social inventory has not increased significantly. In the first ten days of January 2019, the steel stock of key steel enterprises in China was 11.27 million tons, down 1.05% annually. If this situation can continue, if there is not a large number of hidden inventory, especially a large number of "passive inventory", then after the arrival of spring, there will not be a large number of steel materials concentrated on the market situation, price pressure will not be heavy.

Third, the steel price level did not rise sharply before the festival.

Fourth, the rate of steel production growth or has reached its peak.
This is a very uncertain but very important factor. According to statistics, the national crude steel daily production in December last year hit a new low since April 2018. This should be good news for the spring market. Relevant departments recently said that China's iron and steel industry has fulfilled the target of eliminating the excess capacity of 100 million to 150 million tons in five years ahead of schedule. At present, the steel market environment has been significantly improved, and the contradiction of serious overcapacity has been effectively alleviated. Theoretically and logically speaking, after several years of steel production capacity reduction and complete banning of "floor steel", and after several years of strong release of steel production, it seems that the continued substantial growth of China's steel production in 2019 should be the end of the storm, whether crude steel or steel production, its growth rate should be lower than last year's growth level. Based on this, it is concluded that the growth rate of iron and steel production in China this spring should be lower than that of its demand.

Judging from the above main factors, the spring market of steel products in China will be better than expected this year.