The performance of the real estate market is also being transmitted to the upstream market. Recently, due to the weakening of demand for building materials, steel prices have begun to fall. As of the close of today (26th), the main price of futures rebar is 4104 yuan per ton, which is higher than in October. The point fell by more than 1,700 yuan.

What is the current situation of steel production and sales?

Downstream demand is sluggish, steel prices fall by 20% in one month 　

Steel traders make every effort to ship and reduce inventories

　　In a steel trading company in Baoshan, Shanghai, workers are cutting steel. The person in charge told the reporter that because the price has fallen too fast recently, downstream home appliance and machinery manufacturing companies are more inclined to buy steel in small quantities.

　　Lin Yanqing, general manager of the investment department of a steel trading group in Shanghai: The spot price of hot coils dropped from 5,800 yuan per ton in late October to the lowest of 4,600 yuan per ton on November 19, a drop of 20%. In September, October and even Sales in November all declined to a certain extent, with a year-on-year decrease of about 15%-20%.

　　The person in charge told reporters that in the face of weaker downstream demand, he is also slowing down steel purchases. At present, the main focus is to make full shipments and reduce inventories.

The steel coils in the warehouse used to accumulate three layers, but now there are only two layers less than.

　　In Hangzhou, Zhejiang, another steel trading company is also facing a similar situation.

　　Zheng Hao, chairman of a steel trading company in Zhejiang Province: After October, it is obvious that demand has decreased, and the impact of construction materials has been greater. The apparent demand for construction materials in October has dropped by about 30% compared with the same period last year, and industrial materials have dropped by 10%. about.

　　Industry insiders told reporters that from January to October, the floor space of housing starts fell by 7.7%.

In the context of the shortage of funds of real estate developers and the underperformance of the real estate market, the terminal demand for steel has declined to a certain extent.

Decreased supply of steel mills, profitability fell sharply

　　In the first half of this year, the price of steel was still rising continuously. What kind of impact has the current sharp turn in steel prices brought to steel mills?

　　In a steel plant in Ningbo, Zhejiang Province, the reporter saw that one of the two blast furnaces in the plant had been extinguished. The staff told the reporter that the National Development and Reform Commission and the Ministry of Industry and Information Technology proposed to ensure that the national crude steel output in 2021 was reduced year-on-year in the first half of the year. Steel companies must control output.

　　Ling Lin, business director of a steel international trading company in Ningbo, Zhejiang: The overall output has dropped by 50% year-on-year, and there have been certain changes in the ore structure, mainly tending to some low-grade discount mines.

　　Industry insiders told reporters that the crude steel output of many steel mills has declined since July, but the decline in demand is far more serious than the decline in supply, which has caused steel mills to be under pressure in the near future.

In early November, because the cost of stocked steel was higher than the market price, many steel mills suffered losses at that time.

The profit of steel mills in Tangshan, Hebei and other places even fell to 100 yuan per ton of steel.

However, as steel prices gradually stabilized, steel mills' profits began to return to normal levels.

　　Wang Jinhua, director of a steel data platform research institute: The current profit of steel mills is still more than 500 yuan per ton, and the low point is around mid-November, at more than 200 yuan per ton. At present, the profit of steel mills has not fallen further, but has rebounded.

Iron ore prices plummeted, over 50% of the port inventory is severely overstocked 

　　As the basic raw material of steel, the price of iron ore has also been falling since mid-July this year. The main iron ore futures contract has dropped from a high of 1265 yuan/ton to 575.5 yuan/ton today (26th). The decline in the past month has exceeded 50%. In the next stage, will the prices of iron ore and steel continue to drop?

　　In Taicang Port, Jiangsu, the reporter saw dozens of piles of iron ore of different tastes from all over the world.

The person in charge of the port said that in the past month, the pressure on the port's iron ore inventory has begun to increase, and the pace of iron ore imports has slowed down significantly.

　　Huang Yong, deputy general manager of Jiangsu Taicang Wugang Wharf Co., Ltd.: After Taicang Wugang Wharf’s unloading volume hit a record high in August, it dropped slightly in September and October. Beginning in the middle of the month, the volume of iron ore arriving at the port has declined month-on-month.

　　Industry insiders told reporters that the recent domestic iron ore port inventory has climbed from 120 million tons to nearly 160 million tons.

Behind the cumulative increase in inventories and the decrease in foreign ship arrivals is the decline in the market's intention to purchase iron ore spot.

Since July, domestic steel mills have begun to limit production. Under the background of oversupply, the price of iron ore has continued to fall since mid-July. Since November, the price of iron ore has fallen sharply due to the influence of the downstream finished steel market.

　　Shang Long, general manager of an iron ore trading company in Shanghai: In early November, the mainstream iron ore PB powder was basically 760 yuan per ton, last week it was basically 560 yuan per ton, and it fell by 200 yuan within a month.

　　Shanglong told reporters that on the one hand, iron ore prices continued to fall, on the other hand, the downstream finished steel market was not good, so he also began to compress inventory and slow down the pace of iron ore procurement.

Industry insiders told reporters that both iron ore and steel are currently in a state of oversupply.

However, the prices of these two are also close to the cost line, and the short-term decline is not large.

The future trend of steel prices still depends on the recovery speed of downstream demand.