After the Spring Festival, the steel market expects prices to continue to rise

The biggest difference between this year’s “winter storage” and previous years is that the self-storage ratio of steel companies has increased significantly, and traders are less motivated by “winter storage” and their own inventory is lower due to the excessively high prices of “winter storage” and the lower than expected discounts. The same period in previous years. Coupled with the late Spring Festival every year, and the number of people who are "in situ Chinese New Year" affected by the epidemic has increased. The author predicts that the terminal construction will start faster after the Spring Festival than in previous years. In order to meet the needs of end users, traders may launch a relatively substantial round of replenishment procurement requirements after the Spring Festival, and the release of terminal demand in the early stage will drive steel prices to rebound after the Spring Festival.

After the Spring Festival, related infrastructure projects will intensively usher in a "starting wave", superimposed on the slight correction of current spot prices, which to a certain extent released the risk of high steel prices in advance. After the Spring Festival, traders will focus more on exploration. Provide the possibility for the market to usher in a "good start" after the Spring Festival.

In addition, despite the recent weakness in the raw material futures market, the spot prices of iron ore and coke remained firm. Under this circumstance, after the Spring Festival, the steel market's cost support is still stable, and steel prices have limited room for falling.

Regarding the operation of the steel market throughout the year, from the perspective of the global economic environment, the 2020 epidemic has severely affected the global economic development, and most of the world's major economies have experienced negative economic growth. Entering 2021, the global economic environment has changed. As countries continue to vaccinate, the impact of the epidemic will gradually decrease. After a long period of downturn, major economies in the world have an urgent need to restore their economy, which will form a better expectation for global steel demand. From a domestic perspective, in 2020, my country's epidemic prevention and control has achieved world-renowned results. The domestic economy has rebounded quarterly and the economy has achieved positive growth throughout the year. This has laid a good foundation for domestic economic development this year. Coupled with the country's vigorous efforts to build a new development pattern, new changes will occur in the focus of domestic economic development, which will have a new pulling effect on the steel market.

On the whole, with the possibility of unexpected release of demand and strong cost support, the steel market is expected to usher in a "good start" after the Spring Festival. However, it should be noted that market participants must focus on the release rhythm of steel enterprises' production capacity, and beware of the imbalance of market supply and demand caused by the excessively fast supply of steel, which may lead to a "downturn in spring".

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