"High cost, low demand" may make steel prices consolidate at a high level

　　Demand exceeded the expected release of steel social inventories continued to decline ...... recent steel market rare in the off-season ushered in a wave of rising market. I believe that this wave of rising inertia will still exist in the short term, but the momentum of continuous high or will be insufficient. With the later release of demand slowed down, the market fear of heights aggravated, "price cuts to run" sales model will gradually increase, the steel price is difficult to have a new breakthrough in the short term, is expected to enter the stage of high shock adjustment. I believe that in this running situation, the cost support is solid will become the round of steel prices will be "diving" or high consolidation of the key.

　　The reason is very simple. Experienced in early November after this wave of rapid steel prices, although the downstream industry to catch up with the demand still exists, but the demand for both the size and speed of cash has been difficult to compare with the previous period. This means that in the next stage, steel inventory speed will slow down, demand for steel prices will weaken the pulling capacity, steel prices continue to move up the space is not large.

　　I believe that with the reduction in demand, market transactions tend to be flat, cost factors will regain the dominance of market conditions. On the current market situation, coke, iron ore and other raw fuel prices firm, later there is still a certain amount of upward space, which will provide a strong bottom support for steel prices, so that steel prices in the short term will not appear due to the slowdown in the release of demand and the possibility of a sharp decline. Under the role of high cost, this round of steel price adjustment is very likely to "soft landing".

　　Iron ore, for example, the current Brazilian and Australian iron ore shipments fell back from the high level, iron ore port inventories for the first time, the market mentality turned strong, coupled with some areas of the PB powder and other mainstream raw material resources supply is tight, iron ore prices are expected to remain firm in the short term. At the same time, the coke market has also opened the 7th round of price increases, although the steel enterprises resistance is strong, but because some areas of Shanxi Province coke enterprises in overhaul or shutdown, coke resource supply is tight. Therefore, the probability that steel enterprises will accept this round of price increases. From a comprehensive point of view, in the short term, the raw fuel market prices are unlikely to pull back, a small increase or high shock adjustment will become the dominant market. This also means that the production costs of steel enterprises will further increase the high cost of forcing steel enterprises can only further increase the ex-factory price of steel to transfer the cost pressure.

　　I believe that the late steel market will gradually enter the "high cost, low demand" operating situation, in the absence of major positive or negative factors, high cost will block the space of falling steel prices, steel prices to provide a strong bottom support, steel prices "diving"! The possibility of steel prices "dive" is not great. However, weakening demand will lead to steel prices rising power is insufficient, steel prices may return to the "up or down" situation. For market participants, seize the opportunity to optimize inventory, avoid chasing the rise, the bag for peace is the best choice.

(Responsibility: Mo Jinghan)