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Building Steel Price Competition Intensifies, Market Reversal Still Needs to Be Observed

Jun 18, 2024

 

Building Steel Price Competition Intensifies

The building steel market has seen a continuous decline in prices since June, with the national average falling to 3,713 yuan/ton as of the 13th, a cumulative drop of 117 yuan/ton, marking a new low since April 12th. The core contradiction of this price drop is the gradual entry into the off-season for demand, while supply remains at a relatively high level, leading to a mismatch between supply and demand.

Supply Pressure and Seasonal Demand Weakness

Despite the continuous decline in steel prices, positive signals have emerged, especially after the recent news on crude steel regulation, which has led to a "stabilization after the stop" in steel prices. The market is still in a state of accumulating contradictions, and we have not yet seen a turning point for the improvement of supply and demand. Instead, inventory accumulation is likely to continue.

Impact of Crude Steel Reduction on Building Steel Production

According to the "Energy Saving and Emission Reduction Action Plan for 2024-2025" issued by the State Council, and the "Special Action Plan for Energy Saving and Emission Reduction in the Iron and Steel Industry" issued by relevant ministries and commissions, the main goal is to reduce the energy consumption per unit of product of blast furnaces and converters by more than 1% by the end of 2025 compared to 2023, and the energy consumption of electric arc furnace smelting by more than 2%. The comprehensive energy consumption per ton of steel is expected to be reduced by more than 2%, with an estimated reduction of about 20 million tons of standard coal and a reduction of about 53 million tons of carbon dioxide emissions.

Based on our calculations, the expected reduction in crude steel is about 20 million tons/year. Combined with the statistical data, the cumulative output of crude steel from January to April 2024 has decreased by 10.71 million tons year-on-year, reaching about 54% of the target. If this pace continues, the target for crude steel reduction in 2024 can be achieved.

Market Outlook

Overall, the building steel market in late June will face more disturbances, and the competition may further intensify. In the short term, the building steel market will continue to fluctuate, and the market needs some time to gain space. After the middle and late period of the month, if the supply side continues to contract or demand gradually picks up, the market will be able to reverse the current downturn, and prices may rebound to some extent.

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Americ Energy (CHINA) Co., Ltd. stands as a prominent manufacturer and distributor of a comprehensive range of stainless steel products, designed to cater to the diverse needs of various industries. Their offerings encompass stainless steel tubes, plates, strips, and square tubes, all manufactured to uphold the highest quality benchmarks.

Contact Information: - Website: www.metal-ae.com - Email: ae@americenergy.com - Phone: 13521210668 - WhatsApp: 13521210668 - Address: No.298 Fengwei Road, Xishan Development Zone, Wuxi City, Jiangsu Province, China

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