Steel supply and demand is expected to improve in the second half of the year

According to the research report, Steel supply and demand is expected to improve. In the second half of the year, and the cost pressure is gradually relieved. In the first half of the year, as the downstream demand was lower than expected, the upstream raw material supply was limited, the profits of steel plants continued to compress, and the steel market fell back. Graphite electrodes for electric furnace steelmaking  are supplied in stock all year round.

Looking forward to the second half of the year, under the background of "double carbon", the crude steel output will continue to be reduced in 2022, and the steel supply will continue to be constrained; with the promotion of the "stable growth" policy on the demand side, the impact of the epidemic will subside, the probability will pick up in the second half of the year, and the supply of raw materials will continue to recover. The steel plant is going through the most difficult moment in 2022, and the profit in the second half of the year is expected to pick up significantly.

The main points are as follows:

Demand side: The "steady growth" policy was implemented and demand picked up substantially in the second half of the year. The Central Economic Work Conference clearly proposed that the economic work in 2022 should be "stable and seek progress in stability". With the implementation of policies to stabilize growth and the receding impact of the epidemic, the demand for real estate, infrastructure and manufacturing is expected to be boosted in the second half of the year. The demand for steel is expected to continue to rebound, and the improvement of consumption margin is expected to increase.

Supply side: Under the "double carbon" policy, the elasticity of steel supply continues to be constrained. Along with the rebound in the second half of the demand and last year's low base effect, the crude steel output in the second half of the year is expected to turn positive year-on-year, but considering that the annual demand is difficult to increase significantly, under the "double carbon" background, steel supply elasticity continues to be constrained. The National Development and Reform Commission said in 2022 will continue to carry out the crude steel production. In the second half of this year, the production of molten iron and crude steel may decline month-on-month.

Raw material side: The price logic returns to steel, and attention should be paid to the recovery of raw materials supply. If the supply and demand of finished products improve in the second half of the year and the profits of steel plants pick up, the raw material prices will continue to be supported. However, as the supply of scrap steel, iron ore and coking coal is expected to pick up in the second half of the year, the price performance of raw materials may be weaker than that of finished products, which will help the steel plants to repair smelting end profits.

Graphite electrode side: Under the background of "double carbon", EAF steel will drive a large demand for graphite electrodes, and the price of graphite electrodes is expected to rise in the long term. EAF steel will usher in great development, which will drive the demand for graphite electrode in large quantities. On the supply side, graphite electrode itself is a high energy consuming industry, and the approval of production capacity is limited. The inflection point of the industry is gradually emerging, and the price of graphite electrode is expected to rise in the long term. Get more reports about the recent steel market, chat with us.