How to choose the direction of steel price?

Steel demand is guaranteed

The steel industry is a beneficiary industry in the context of the epidemic, and the government’s active expansion of effective investment has strongly boosted the demand for steel.In the third quarter, fiscal funds will continue to be in place. Special debts will be issued in August and September, and funds will be transmitted to entities. Infrastructure investment is expected to maintain the trend of repair; in the past two months, new real estate construction and sales have maintained a relatively high growth rate, and real estate development in the short term Investment will still maintain a certain degree of resilience; while manufacturing production is gradually accelerating and the overall level has reached a normal level, and investment will continue to recover from the previous month. Generally speaking, domestic steel demand is still guaranteed in the later period.

At the same time, with the restart of the overseas economy,2311 Steel Suppliersthe recovery of the global manufacturing industry has been more obvious, and the price of the international steel market has risen significantly, which is conducive to the direct and indirect exports of steel.
Facing the impact of the epidemic, the central bank has increased its monetary policy counter-cyclical adjustments. As of the end of July, the growth rates of broad money supply (M2) and social financing were 10.7% and 12.9%, respectively, 2 and 2.2 higher than the end of 2019 Percentage points, in the context of overall loose liquidity, PPI has bottomed out. Steel products have commodity attributes and financial attributes. Under strong expectations, loose funds will make their financial attributes more prominent, and it will be easier to promote price increases. Since the end of June, the current price difference of rebar has gradually expanded.

In July, the scale of new social financing and RMB loans contracted from the previous month, and overall liquidity may be marginally tightened. However, the difference between commodities and financial assets is that prices are transmitted through demand. In July, the growth rate of M1 rebounded and hit a new high in the past two years. The growth rate of M2 fell. The narrowing of the scissors gap between M1 and M2 indicated that companies took the initiative to replenish inventory or expand capital expenditures. The loose liquidity was transmitted to the enterprise side, and the production and investment of enterprises Will tend to be active, forming effective support for industrial product prices.