Since November 2018, the trend of steel price has been complicated. After sorting out, we find out the rule: in the past three months, steel prices have been changing unpredictably, but they have not escaped the two fundamental factors of supply and demand. Both of them work in turn and become the dominant factors affecting steel prices.
In November, under the guidance of environmental production restriction, the market feared excess supply, which led to a sharp drop in steel prices; in December, due to the dual effects of abundant supply and weak demand expectations of steel mills, steel prices continued to be weak shocks; starting from January 2019, with the steel mill capacity entering a stable period, winter storage demand gradually entered the market, resulting in a slight rise in spot price shocks.
Near the Spring Festival, some businessmen are ready to enter the holiday, and spot prices are expected to maintain a steady trend.
Low inventories, improved market expectations and gradual opening of winter storage before the beginning of the year have significantly supported steel prices. As the pressure of economic downturn increases and demand will be supported by policy stimulus in the early spring of next year, whether steel prices can rise depends mainly on the speed of stock accumulation and construction site construction after Lantern Festival. In this regard, we believe that steel prices will rise slightly after the Spring Festival holidays in China.