In the first half of September, steel prices remained within a narrow fluctuation range. Although major steel mills continued to raise their pricing policies later in the year, the support for the market was limited. By the end of the month, funding pressures became more evident. Businesses were actively selling goods, but on-site purchasing remained cautious, and overall demand showed little change. On the other hand, with the "Jinjiu" bull expectation, there was limited room for further price declines. Overall, the market experienced a weak and stable adjustment during the ten days.
The market inversion rate has been expanding. For example, the price of three-grade rebar at Shagang was 3,690 yuan/ton at the end of August, while the current mainstream price in Jiangsu, Zhejiang, and Shanghai stood at around 3,557 yuan/ton, reflecting a downward movement of 133 yuan/ton—up from 70 yuan at the end of the previous ten-day period. The volume of inverted transactions has increased significantly.
During the tenth month, Tangshan billet prices saw a narrow adjustment. As of now, the contract price of Tangshan has dropped by 50 yuan/ton. Additionally, the Platts iron ore index (62% PB powder, CFR) rose by $3.5/ton from the end of August and remained around the $140 mark. The firmness of raw material prices has provided some support to steel mills. Meanwhile, traders suffered significant losses over the past ten days, with average prices in each region shifting from positive to negative growth. After deducting rebates from steel mills, most traders lost between 70-80 yuan per ton.
The market is experiencing an inversion of over a hundred dollars, and recent price fluctuations have led to a sharp decline. Although the new round of steel mill production remains weak, given the high production costs and the psychological preference for the "golden September," Shagang's stability is relatively strong. On the other hand, although the steel market was in an uptrend channel throughout August, continuous increases in factory prices left traders with minimal profit and even some losses. Steel mills may introduce recovery policies to support traders.
Considering the current market trend and the outlook for the future, the Information and Building Materials Research Group expects Shagang to adjust its factory prices in early September, potentially increasing them by RMB 50 per ton.
For the pre-September forecast: If major mills push up their factory prices, and with the high cost of delivery fixed, merchants will likely continue to reduce their willingness to lower prices. Additionally, HSBC Bank reported that China's manufacturing PMI index for August was initially 50.1, marking a return above the 50 threshold after three months of contraction. This indicates a significant improvement in the activity level of China's manufacturing sector. As the economy recovers, consumer demand is expected to rebound, which could stimulate steel consumption. However, steel mills are likely to maintain high production levels or push prices higher, leading to increased supply-demand conflicts and limiting the rebound of steel prices. Overall, steel prices are expected to remain within a narrow range in early September.
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