Since mid-June, the social stock of steel has risen for nine consecutive weeks. On August 9, the social stock has exceeded the new high of the same period in the past five years, which has brought a lot of pressure to the market. Recently, in the expectation of the public, steel social inventory has finally declined. According to the monitoring data of Langer Iron and Steel Cloud Merchant Platform, as of August 16, 2019, the social stock of steel in 29 key cities in China was 11.432 million tons, down 155,000 tons from last week, down by 1.3%.

Will steel prices bottom out and rebound when inventory declines and demand improves? Ma Guanghui, an analyst at Langer Iron and Steel Network, said there is room for rebound if warehousing and demand conditions continue to improve. But we also need to pay attention to the news, the recent multi-empty entanglement, saw situation is obvious, the market is repeated, especially the progress of Sino-US trade.

According to the monitoring data, on August 19, 2019, the average price of three-grade threaded steel (25mm) in ten key cities in China was 3782 yuan/ton, showing a slight increase. Thread steel futures prices have also risen, as of August 19, the previous period of the 1910 contract of threaded steel futures surged, closing at 3747 yuan/ton, up 33 yuan/ton, a decline of 0.89%.

After entering August, steel prices continued to decline, and the profits of steel mills were continuously compressed. In addition, the high price of iron ore and the increase of cost have made many steel enterprises start to stop production spontaneously. According to the monitoring data of Langer Iron and Steel Network, as of July 29, the blast furnace start-up rate of 100 small and medium-sized steel enterprises in China was 79.1%, which was 5.7 percentage points lower than that of the same period last year.

Recently, Shaanxi, Shanxi, Ganchuan steel mills in view of the current market conditions, held an internal coordination meeting, decided to take the lead in limiting production and reducing production, including Liheng, Jianbang, Hongda, Jianlong, Shaanxi, Gaoyi, Hongda and other steel mills. The spontaneous production reduction and shutdown of enterprises will reduce the pressure of production in later period.

From the latest crude steel output data, it can also be seen that the daily average output of crude steel and the daily average output of steel declined in July. With the approaching of the 70th anniversary of the founding of the People's Republic of China, there is a certain expectation for the late production limit, steel production may further decline, which will play a role in alleviating the supply-demand relationship in the later period.

There have also been signs of a revival in demand recently. On August 16, Meng Wei, deputy director and spokesman of the Policy Research Office of the National Development and Reform Commission, said that in July, the National Development and Reform Commission approved 12 fixed assets investment projects with a total investment of 70.5 billion yuan, of which 8 were approved and 4 were approved, mainly in transportation, energy and other industries. With the arrival of the "gold, silver and ten" peak demand season, it will be conducive to improving the relationship between steel supply and demand. At the same time, after some price adjustments, it attracts the involvement of part of the demand for bottom-copy.

In addition, new news has come from the Sino-US trade war. Recently, in response to the announcement by the Office of the United States Trade Representative that a 10% tariff will be imposed on about $300 billion of imports from China, the relevant head of the Tariff Commission of the State Council said that the move by the United States seriously violated the consensus of the Argentine and Osaka meetings between the two heads of state, and deviated from the correct track of resolving differences through consultation. China has to take necessary counter-measures. The Sino-US trade war faces the risk of further escalation.

Ma Li, chief analyst of Iron and Steel Network, said that in the 70 years before and after Daqing, limited production and seasonally improved demand will bring some support to the market, and the market in August and September still has a certain resilience. Later, we should focus on the trend of Sino-US trade war, monetary policy, production restriction policy and changes in steel output, iron ore prices and costs, and inventory changes.