The domestic steel price index has dropped by 50 yuan/ton in just nine days, reaching 3,170 yuan/ton in a single week. This marks the lowest level in the past eight years since September 2006. Despite this significant decline, the current steel prices are not enough to fully suppress market momentum. Although there is still resistance to further price increases, it's expected that steel prices will eventually reach a bottom in the coming period.
Looking at specific data, the average price of 25mm grade 3 rebar in 61 major markets across the country last week was 3,319 yuan/ton, down by 14 yuan/ton from the previous week. In Hangzhou, a key market in East China, high-grade rebar was reported at 3,200 yuan/ton, a decrease of 10 yuan/ton in one week. In Guangzhou, South China, rebar prices were recorded at 3,390 yuan/ton, down by 20 yuan/ton. Meanwhile, in Chengdu, a major market in Southwest China, rebar prices reached 3,580 yuan/ton, falling by 40 yuan/ton in a single week.
From the perspective of steel mill production, according to the latest data from the China Iron and Steel Association, key steelmakers produced 1,767,300 tons of crude steel per day in late May, marking a 1.85% drop compared to the previous period. This is the second time since December 2005 that output from major steel companies has declined.
As steel prices continue to fall and hit multiple new lows, the potential for further declines has significantly weakened. Currently, domestic steel prices are at historically low levels, but underlying financial issues within the industry remain unresolved. Liquidity constraints have become a critical factor limiting the growth of the domestic steel market.
Most steel mills are cautiously optimistic about off-season demand in June, and the operating rate of steel plants has slightly decreased. Overall, market confidence is gradually stabilizing, and short-term steel prices are expected to stop declining and stabilize. On a macro level, policy measures from decision-makers and the easing of monetary policies are also contributing to a more stable outlook. However, the current steel price is not sufficient to eliminate the upward momentum, and the path to recovery remains challenging.
Recently, steel prices have continued to fall. With the arrival of summer and the rainy season in June, the steel market is entering its seasonal slowdown. It is expected that the domestic steel market may experience limited fluctuations during this month. While the market may show some signs of stabilization, long-term price pressures are likely to persist due to weak demand and ongoing financial challenges.
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