What's the views on Chinese steel market in the second half of 2019?
1. Iron ore has an unstoppable momentum. At present, the overall inventory is in a low situation. However, after the recovery of the port and some mines, the overall inventory has gradually recovered, while at the same time the mills' profits revive up, iron ore consumption is also likely to rise.
2. The possibility of a sharp increase in steel output year-on-year is very small. On the one hand, the profit of steel mills is not as good as the previous two years. On the other hand, environmental protection is still playing a role, and it is also necessary to pay attention to the impact of the 70th anniversary of the founding of the People's Republic Therefore, the overall supply for the whole year may only increase slightly.
3. Downstream demand will still have a differentizated effects on steel prices. Real estate and infrastructure will mainly drive long steel products, while the ship and automobile industries will have a greater impact on the steel plates. Therefore, the overall consumption in the whole year is still strong for long steel products and weak for steel plates. What needs to be paid attention to is whether the auto industry will also introduce a mandatory stimulus policy.
4. For the market itself, capital and inventory are points that need to attent. As the economic situation becomes clear, the overall funding situation needs to be maintained by policies. In addition, the inventory situation does not need to be too worried. After several weeks of accumulation, it will also enter the turbulent period and continue to decline at the end of the year. The total inventory may be maintained at around 13 million tons before the Chinese Spring Festival.
5. Overall speaking, the support point of steel price still exists in the second half of the year 2019. But near the end of the year, due to the obvious decline in demand, the steel price has shown an decline on whole, and the long steels are still stronger than the plate according to steel types.