Lgmi: In November, the PMI of the steel circulation industry was 50.3.

In November, the sales volume index and order index of steel circulation companies were 52.9 and 52.4, respectively, which increased by 5.4 and 4.9 percentage points from the previous month, and returned to the expansion range again, indicating that the market procurement demand is active and the off-season characteristics are obvious. The main performance is Direct supply orders purchased at the terminal picked up significantly.


The inventory index of steel circulation companies in November was 45.0, a decrease of 0.1 percentage point from the previous month. From a regional perspective, the inventory index of Central South, Northwest China, East China and North China showed varying degrees of decline, which were 3.6, 1.5, 0.3, and 0.3 percentage points lower than those of the previous month; while the inventory index of Northeast and Southwest China increased, respectively. Increased by 5.2 and 4.0 percentage points from the previous month. From the perspective of scale, the inventory of steel circulation enterprises with annual sales of more than 1 million tons, between 500,000-1 million tons, and 100,000-500,000 tons has declined, while the inventory of steel circulation enterprises with annual sales below 100,000 tons appears. The rebound shows that the circulation of steel market resources is relatively smooth, and the inventory of various steel circulation companies in the market has dropped significantly. From an absolute point of view, since November, due to the unexpected outbreak of market purchasing demand, the social steel inventory has continued to decline, and the rate of destocking has exceeded market expectations. According to the market monitoring of the Lange Iron and Steel Research Center, the social steel inventories of 29 key cities nationwide in November decreased by nearly 1.79 million tons from the previous month, a drop of 20.5%.


Looking at the leading index, the purchasing willingness index of the steel circulation industry in November was 48.3, an increase of 2.8 percentage points from the previous month. The trend judgment index is 47.4, which is 4.1 percentage points higher than last month, indicating that the pessimistic expectations of the sample companies for the market outlook have changed, mainly due to the traditional demand in the off-season and strong market procurement demand, which once again ignited the hope of market traders for the market outlook. At the same time, Beicai's southbound port was blocked, and the implementation of environmental protection and production restriction policies exceeded market expectations, which led to sample companies being more cautious and optimistic about their future purchase intentions.

In November, the steel market showed a trend of rising first and then suppressing. At the beginning of the month, due to the weather, environmental protection and production restrictions were accompanied by the steel market. The output of steel mills was suppressed to a certain extent. Under the influence of expected pessimism and easing supply pressure, It is in a situation of frequent shocks; subsequently, due to the emergence of construction sites in various places, the market procurement demand unexpectedly erupted, and at the same time, Northwood's southward departure at the port was significantly blocked, which caused a serious supply-demand mismatch in the southern market. The southern market took the lead and the northern market followed it closely. Later, the steel market experienced a rapid pull-up; near the end of the month, due to the fear of a rise in the market after the rapid pull-up, the market price began to pull back.


Supply side: In the first 10 months, the average daily output of crude steel remained at about 2.724 million tons, of which the average daily output of crude steel continued to decline in October, mainly due to the three major regions (Beijing-Tianjin-Hebei and surrounding regions, and the Yangtze River Delta region). (Fenwei Plain) The comprehensive air pollution control plan for autumn and winter has been implemented, and the capacity of steel production capacity has been further limited. However, due to the rapid rise in market prices after mid-November, the profit of steel mills has been significantly repaired, which will stimulate production capacity. Released again, it is expected that the average daily output of crude steel will rise slightly in November, and the supply pressure of the steel market may gradually increase in the later period.


Demand side: Since entering November, the off-season characteristics have been more obvious, the market purchasing demand has gradually increased, the social steel stocks have continued to decline, the destocking progress has clearly exceeded market expectations, especially the demand for construction steel has exceeded expectations, mainly due to domestic demand The downward pressure on economic growth is increasing, and the underpinning effect of infrastructure investment is obvious. The state has increased counter-cyclical policy adjustments and accelerated construction of infrastructure projects. At the same time, due to the toughness of real estate investment, the tide of rushing work in various places has caused unexpected construction steel demand during the off-season. The outbreak has formed a mismatch between supply and demand in the steel market.


The prosperity of the steel industry in December will be somewhat lower than in November, mainly because the small peak of downstream procurement demand in November has passed, and the winter market procurement demand will return to the off-season level, and futures bulls will continue to make profits and flee. Under the influence of the mentality of chasing up and down in the steel market, the downstream purchasing and watching mood is relatively strong, and the spot market transactions will gradually calm down. Moreover, due to the rapid rise in steel prices in the early stage, the profits of steel mills will be rich again. In the winter, the steel market will still face increasing supply pressure, and the overall steel market will show a trend of pressure and shock callback. (Original manuscript of Lange Steel Research Center, please indicate the source when reprinting)