Steel prices come under pressure as inventory drawdown narrows

In May, the seasonal high of end consumption has passed, but the steel mills' production continues to increase, the decline in steel inventory is narrowing, and coke prices have no momentum after four consecutive rounds of price increases, so a short-term steel price decline is expected. The
apparent consumption cycle is weak, and downstream demand is gradually increasing .
Affected by the outdoor environment, there is an obvious seasonality in steel consumption. According to the cycle data of the survey and research by the Iron and Steel Federation, the apparent consumption of steel reached a gradually high price in mid-April and has remained high ever since. However, last week's apparent consumption of steel fell to 8.89 million tons from 9.6 million tons the previous week, a cycle ratio of 7%. In mid-May, with the shift of heat in the north and the increase in rainy weather in the south, the apparent consumption of steel weakened seasonally, which is unfavorable to steel prices.
Steel mill emissions increased, and blast furnace pig iron production increased month-on-month in April
. With the continued decline in steel inventories, steel prices bottomed out and rebounded, improving steel mill profit margins and increasing steel mill emissions. According to the iron and steel union high-frequency data, the average daily pig iron production of 247 steel enterprises increased from 2.2173 million tons in March 2024 to 2.2582 million tons in April. Meanwhile, the profit level of steel mills improved month-on-month, and the proportion of profitable steel mills increased from 24.84% in March 2024 to 42.64% in April. By last week, the average daily pig iron production of 247 steel enterprises had risen to 2.3067 million tons. According to real-time raw material cost estimates, the current tonne steel profit of screw steel is around 80 yuan / ton, and steel mill production in May is expected to continue to rise month-on-month.
Steel inventory declines in preparation for increased demand, narrowing the decline in steel inventory
Steel mill emissions are gradually increasing, but downstream demand has gradually passed the high point, and the decline in steel inventory is gradually narrowing. According to survey and research data from the Iron and Steel Federation, steel trader inventory in April fell from 17.64 million tons in March to 14.28 million tons, a decrease of 3.365 million tons, a decrease of 23.24%. Steel mill inventory fell from 7.46 million tons to 5.12 million tons, a decrease of 2.34 million tons, a decrease of 31%. However, the decline in steel inventory last week was obviously narrower. Among them, trader inventory decreased by only 130,000 tons, the decrease rate narrowed to 0.92%, among which hot rolled steel inventory, cold rolled inventory, and medium thickness plate inventory increased by 1.79%, 2.94%, and 2.48%, respectively. Steel mill inventory increased for the first time compared to the previous month after six consecutive weeks of decline, but the increase rate was only 0.38%. Looking at the overall inventory, the round-to-round ratio is still declining, but the decline rate is significantly narrower.