Steel market analysis: Large probability of wide oscillation of iron ore

Entering June, iron ore futures prices showed an oscillating upward trend. As of the night of June 9, the iron ore main contract 2009 rose 2.96% to 764 yuan/ton. In the iron ore spot market, the 62% index was basically flat.

Domestic demand is high

From the perspective of macroeconomic indicators, the construction industry has recovered rapidly. Relevant data show that the investment in infrastructure construction (excluding electricity) from January to April has increased by -11.8% year-on-year, a significant increase of 7.9 percentage points from January to March. From January to April, the cumulative investment in real estate development increased by -3.3% year-on-year, an increase of 4.4 percentage points from January to March. From January to April, the area of ​​commercial housing sales increased by -19.3% year-on-year, a 7 percentage point increase from January to March. From January to April, the total area of ​​newly started housing increased by -18.4% year-on-year, an increase of 8.8 percentage points from January to March.

Currently, terminal demand mainly depends on real estate catch-up and infrastructure investment improvement. In the future, affected by the issuance of 3.75 trillion yuan of special bonds, the capital for construction is relatively abundant, and it is expected that the intensity of construction will continue. Real estate is currently rushing to work, but from the data of land purchases, in May except the first-tier cities, land transactions in other cities have declined significantly, which may limit the continued rise in demand for real estate steel.

Steel production remained stable
　　
Recently, the utilization rate of blast furnace capacity has remained stable. According to my steel statistics, the actual utilization rate of blast furnace capacity of steel mills across the country is 84.1%, a decrease of 0.8 percentage points from the previous month. Hot metal production also rebounded. The average daily hot metal production last week was 2.446 million tons, up 14,000 tons from the previous month. The output of the five major varieties of steel products was 10.76 million tons, up 40,000 tons from the previous month, down 0.2% from the same period last year.
　　
The price of scrap steel in East China rose by 80 yuan/ton last week. At present, the price difference between scrap steel and molten iron has returned above zero yuan. The economics of scrap steel have weakened, further supporting iron ore prices.