The steel market in the fourth quarter is not weak

The fourth quarter is the traditional "off-season" in China's steel market, but from its first month important indicators of good performance, this year's fourth quarter of China's steel market should be "off-season is not light".

The first is the crude steel apparent consumption high running.According to the statistical data, the cumulative apparent consumption of crude steel in China from January to October 2020 is 845,806,000 tons (excluding billets and rough forgings), an increase of 8.3% over the same period last year.In October, the year-on-year growth rate reached 18.2%, and the growth rate increased again.It is expected that in the last two months of this year, the apparent consumption of crude steel in China will increase by no less than 10% year on year, continuing to exceed the annual average growth rate of each quarter.That is to say, after entering the fourth quarter of the traditional off-season, The V-shaped right side of China's crude steel consumption trend continues to rise, continue to elongate the annual "hook" spoon handle situation.

Second, steel exports increased month-on-month.Since the beginning of this year, China's steel exports have suffered due to the deterioration of external demand environment.According to statistics, from January to October 2020, China exported 44.425 million tons of steel, a year-on-year decline of 19.3%.It is worth noting that in October this year, exports of steel 4.039 million tons, although still down 15.5% year on year, but its decline has narrowed significantly, and the month-on-month growth of 5.5%, continuing the three months of month-on-month growth since the second half of the year.Considering some of the leading index order, including 10 in steel industry for new export orders index, rose 5.4% to 52.0% month-on-month, for the first time since 2019 to more than 50%, and encouraging policy stimulus, steel exports after 2 months of the year is expected to continue to rebound, higher than that of exports in the fourth quarter in the first three quarters of the average.

Third, steel enterprises actively increase production.According to statistics, from January to October this year, the total output of crude steel is 873.93 million tons, a year-on-year increase of 5.5%.In October, China's crude steel output was 92.2 million tons, up 12.7% year on year.Despite the environmental constraints, but due to the strong demand, it is expected that the growth momentum of crude steel production in the second two months of this year will continue to be strong.

After entering the fourth quarter, although the national steel and steel production maintained a high level, but the same period of steel inventory has declined.According to the data released by China Iron and Steel Association, in early November 2020, the social inventory of 5 varieties of steel in 20 cities in China was 10.03 million tons, down by 11.0% month-on-month, and the decline of steel inventory showed an expanding trend since the fourth quarter.This also shows from a side that the fourth quarter of China's steel demand is strong, is indeed the "off-season is not light."

Fourth, import growth continued to increase.According to customs statistics, from January to October 2020, China imported 1705,000 tons of steel, a year-on-year increase of 73.9%.In October, imports of steel reached 1.932 million tons, up 88.5% year on year, 11 percentage points higher than the average in the previous month.Because of the strong domestic demand, as well as the existence and expansion of price difference in the internal and external markets, the import volume of steel and billet in the second two months after the fourth quarter of this year is still large.

Fifth, the leading index positive upward.Two recent purchasing managers' indices have shown positive trends in production demand.The official National Bureau of Statistics purchasing managers' index for October was 51.4%, above the line that separates expansion from contraction for eight months in a row.The Caixin China manufacturing purchasing managers' index also rose to 53.6 per cent in October, the highest reading since February 2011.The two major PURCHASING managers' indexes continue to expand, indicating that the economic conditions of major steel consumer industries (manufacturing) have improved significantly. It is a highly likely event that China's steel market will improve in the fourth quarter.

Sixth, market price fluctuations and rising.Since the beginning of this year, The Chinese steel market prices first suppressed after the rise, wide shocks rise, gradually higher than the level of the same period last year.After entering 4 quarters, appeared a wave to rise again.It is expected that the national steel price index will continue to run at a high level this year and may even rise further.

It is the above six aspects of good performance, so it can be expected that the Chinese steel market in the fourth quarter of this year is not weak, the main factors there are two: first is the emergence of a large number of rush.In the first half of the year, especially in the first quarter, national economic activity slowed down or even stagnated, and its economic losses need to be recovered in the second half of the year, including in the fourth quarter.According to statistics, from January to October this year, China's fixed asset investment (excluding rural households) grew by 1.8% year-on-year, 1.0 percentage points higher than that of the first nine months of this year.A large number of rush workers emerge in the off-season, resulting in the "off-season is not light."The second is a marked increase in overseas orders.Great success China's resistance to disease and obvious economic recovery, at the same time, the us and Europe to countries such as the outbreak intensified, forced to start the second round of the blockade, this will be a huge business opportunities, Chinese enterprises overseas supply substitution effect is obvious, household appliances, medical equipment, electronic products, such as a large increase in export orders, full production related enterprises, promotes the steel demand in the fourth quarter.