With the end of the "July 1st" celebration of the centennial of the founding of the party last week, the production restriction policy in Tangshan has also been adjusted. On July 2nd, most of the steel companies in Tangshan resumed production of blast furnaces, and began to implement the 30% production limit policy from July 2 to December 31 (except for steel companies that have completed ultra-low emission targets). Currently, blast furnace production is resumed. They are all effectively resuming production in accordance with their respective production rhythms. At the same time, from July 3 to July 8, independent steel rolling production was suspended from 22:00 to 9:00 the next day; sintering machine production was suspended, Shougang Qiangang and Shougang Jingtang independently reduced emissions to the maximum extent. At present, the market has higher expectations for stricter production restrictions in the second half of the year. There is more room for maintenance of steel mills, and there is room for weaker output, which will boost steel prices.
July is still in the traditional off-season of the steel market, and worries about weakening demand and increasing inventories have always been topics that the steel market cannot avoid at this stage. The demand for steel has weakened in stages in the short-term, but the resilience is still there.
In recent months, the land acquisition and new construction data at the front end of real estate investment have shown signs of continued weakness. At the same time, under the influence of the overall tightening of funds and centralized land supply, the data of real estate acquisitions has also continued to slow down. Under the influence of these factors, there is a high probability that the newly started area will grow negatively.
Under the dual influence of the superimposed losses in the off-season of demand, steel mills will also increase their efforts to reduce production and overhaul spontaneously. In addition, the policy of reducing crude steel production will still be carried out under the background of "carbon neutrality", and the dual pressure of administrative and market-based production reductions is expected to cause steel supply to fall in July from the previous month.
At present, steel prices will gradually strengthen under the dual influence of cost support and production restrictions. Steel supply will gradually pick up in the second half of the year, and the demand side may face the dual pressure of administrative and market-based production restrictions. Under the background of gradual weakening of fundamentals, the trend of domestic production restriction policies will become the key to steel price trends.
