Wear-resistant board industry review report: sluggish demand market oversold

    Investment strategy: The Shanghai Composite Index fell 1.05% this week, of which the steel sector fell 2.84%. Recent downstream PMI, power generation and credit data all indicate that macro demand has entered a state of extreme depression, leading to steel price subsidies and shrinkage of steel profits. The market is very pessimistic about the demand for iron and steel in the later period. Spot traders have oversold future resources, risk has been released ahead of time, and future price and profit downward space is limited. In addition, we should pay attention to the positive changes that may be brought about by the switching of off-peak season and the end of the Youth Olympic Games. If the demand is not expected to be pessimistic, we can expect the bottom of the fundamentals, and we will closely follow the specific change points.
    Domestic steel prices: Steel prices continued to fall this week. Demand continued to slump downstream this week, compounding the pessimism of the entire industry chain, with intermediate demand falling to freezing point, leading to an accelerated decline in steel prices. From the current level of inventory adjustment and price decline in the industrial chain, we believe that the market has entered a state of oversold, and the current time should not be too pessimistic.
    Inventory situation: Wear-resistant sheet stock in Shanghai market this week was 293,500 tons, down 0.05 million tons from last week, and hot rolling stock was 582,500 tons, up 0.85 million tons from last week. From a national perspective, stocks of all varieties have declined. Mysteel statistics show that the total social stock is 12.3345 million tons, down by 127,000 tons annually. This week the market shipment situation is still not ideal, pessimistic mentality spread. Later, we can pay attention to the following positive factors: the golden nine peak season, the end of the Youth Olympic Games, the resumption of construction sites around, the bottom of the downstream inventory cycle, short-term market shipments are expected to rebound;
    International steel price: This week, international steel prices have risen and fallen differently. The price of building materials in the United States continues to rise, due to the rebound in raw material prices and good orders from the construction industry, the market gradually accepts the previous increase in steel mills; in Europe, the price of sheet and long-term materials has increased, as the summer off season is coming to an end, the buyer's purchase in advance promotes the price to strengthen, and the market is optimistic about the future.
    Raw materials: Mine prices fell this week. The spot price of 66% iron concentrate powder in Hebei is 795 yuan/ton, which is 15 yuan/ton lower than that in the previous year. The price of 63.5% grade Indian iron ore in Tianjin Port is 610 yuan/ton, down 10 yuan/ton annually. The Prussian index (62%) was $88 per ton, down $1.75 annually.
This week, the Universal Index fell below its 2012 low and market confidence hit bottom. At present, iron ore stocks in Hebei steel mills are only 11 days, contracting sharply from 17 days at the beginning of the year and 14 days in May. Short-term inventory cycle and downstream demand for iron and steel are at the bottom of the region. Prices continue to fall with limited momentum.