GDP into the steel industry slack season is not light?

China's economy grew by 3.2% in the second quarter of the year, and the news that GDP turned from negative to positive hit the headlines on Tuesday.The actual growth rate is higher than expected, encouraging!Driven by the rapid recovery of China's economy, the steel industry also appears the abnormal phenomenon of "not weak in the off-season".

The off-season encountered a rapid economic rebound

Generally speaking, June-August is the traditional off-season of the steel industry. Affected by the high temperature in the north and the rain in the south, the steel demand is relatively small, which is reflected in the increase of steel inventory and the decline of prices.

Data show that since March 13 this year, due to the strong demand, steel social inventory has been falling, to June 19, the steel social inventory was 1.021 million tons, but June 24 steel social inventory increased by 0.6 million tons, as of July 17, has been on the rise;June 14, 2019, steel social inventory from the decline to increase;The turning point of 2018 came on June 22.The beginning of June, steel industry into the traditional low season.

But in June, the data showed a generally positive picture.The economy turned from negative to positive in the second quarter on June 16th. The growth rate of import and export both turned positive, the PMI of the manufacturing industry stayed above the line of expansion for four consecutive months, the throughput of goods at ports achieved positive growth for three consecutive months, and the overall electricity consumption grew by 6.1% in June all show that the economy continues to develop well.

The current flood season in the south superimposed high temperature and rain in the north, making the building materials demand seasonal weak, steel inventory showed a rebound trend.However, from the perspective of recent market performance, as the domestic economic recovery in the second quarter exceeded expectations, the iron and steel industry maintained the momentum of supply and demand, market confidence was boosted, driving up the preference of the capital market to black, and pushing up the prices of related products of the industrial chain.Steel industry also appeared the circumstance that slack season is not weak.

The industry data repeatedly set new highs

To be specific, the average daily output of crude steel of key steel enterprises in mid-June hit a new high in nearly 10 years.According to data from China Iron and Steel Association, in the middle of June 2020, key steel enterprises produced a total of 21.423 million tons of crude steel, and the average daily output of crude steel was 2.1423 million tons, which increased by 77,000 tons or 3.73% compared with the same period last year, setting a new high in nearly a decade.

Recently, iron ore price, billet price, steel price, etc., also hit new highs. Data shows that as of July 17, the port iron ore price is 845 yuan/ton, since 14 this month hit new highs for the year, four consecutive days at this high;As of July 16, the price of steel billet is 3410 yuan/ton, which is a new high in the year, and will continue to maintain this high on July 17.

Late peak season or will become more prosperous

China's fixed-asset investment (excluding rural households) fell 3.1% year-on-year to 2.81603 trillion yuan in the first half of this year, the National Bureau of Statistics (NBS) said. The drop was 3.2 percentage points lower than in the first five months of the year and 13.0 percentage points lower than in the first quarter.Infrastructure investment picked up significantly, driving the second quarter of steel demand surge.

According to the statistics of the Ministry of Emergency Management, since July, floods have affected 20.272 million people in 24 provinces (autonomous regions and municipalities directly under the Central government), including Jiangxi and Anhui, with a direct economic loss of 49.18 billion yuan.After the rainy season, related infrastructure construction will increase, and steel demand is expected to increase in August and September.

In terms of macro-direction, the central and local governments have made arrangements to further increase effective investment, and the "two new priorities", including the construction of new infrastructure, new urbanization and major projects such as transportation and water conservancy, have become the focus.In the face of huge capital demand, the implementation of fiscal and financial support policies is accelerating. Under the guidance of the national "six stability" and "six guarantee" policies, steady investment will be further increased in the second half of the year.

Therefore, in the later stage, construction projects are rushed or sped up again. Especially under the influence of flood season, the state will arrange 150 key water conservancy projects, which is expected to drive the strong return of building materials demand.