Excellent purchasing price for observation points in Gujiao, Shanxi

Description :

　　After the opening day of the Shanxi Gujiao Observation Point after the festival, the purchasing price was excellent, leading to a high opening and driving the market to rise wildly. Although the market rose 83% throughout the day, the cumulative increase in the market ranged from 100-200 yuan/ton, which is truly crazy. Although the actual demand is relatively limited, based on current market feedback and sentiment, the short-term market remains bullish and unchanged.

　　The main reason for the price increase is the continuous promotion of policies and the unexpected accumulation of inventory. From a policy perspective, favorable policies have been continuously introduced before the holiday. On the one hand, investment in infrastructure and real estate has been continuously increased, and on the other hand, financial support has been increased. At the same time, it has been stated that policy efforts should be appropriately advanced, bringing opportunities for speculation to the market.

　　At the same time, the lower than expected increase in inventory is the main driving force behind the crazy price surge this round. Affected by the pre holiday meeting, many steel mills in northern China have restricted production, resulting in slower growth rates. Steel mills have adjusted their ex factory prices accordingly, increasing the bottom price space. The inventory increase in the post holiday market was lower than expected and significantly lower than the same period in previous years, resulting in a short-term shortfall and providing support for price increases.

　　Under the influence of bidirectional stimulation, the emotional aspect is constantly released, driving the market to rise and subsequently driving prices higher, forming a period of resonance rise. Some merchants were sold out before the holiday, and faced with a significant increase in prices, their willingness to enter the market began to emerge, which to some extent played a driving role in the price increase.

　　In the short term, resonance has formed in policy, supply, emotional, and market aspects, and the current stage is not the real demand start-up period, so there is still room and time for speculation in the market. However, from the various data released, the expected demand is still not objective. In January, the Purchasing Managers' Index (PMI) for China's manufacturing industry was 50.1%, a decrease of 0.2 percentage points from the previous month, slightly higher than the critical point, indicating that the expansion pace of the manufacturing industry has slowed down. There are also short-term factors that may cause disturbances, and although there is room for recovery in demand in the later stage, there is a certain degree of uncertainty in the recovery cycle. The real estate sector is also not objective. Although favorable policies continue to be introduced, the overall tone for the whole year is still to maintain stable operation, which means that the possibility of strong stimulus measures appearing is relatively small. Since last year, the newly started construction area has continued to decline, and the continuous negative growth in the second half of the year has led to significant doubts about the increase in steel demand this year.

　　Overall, the short-term supply side increment is lower than expected, coupled with positive stimuli, and there is still room for price increases. The risk in February is not significant. Against the backdrop of slow inventory growth, there is little pressure to release market risks, and there is a high possibility of high-level fluctuations throughout the month. In early March, with the convening of the Two Sessions, policy stimulus is expected to continue. In the short term, rebar is expected to impact around 4950-5000. Due to a large inventory gap, the possibility of a significant drop is currently limited as we only see temporary empty orders entering the market. However, it should also be noted that as prices continue to rise, the market's willingness to realize profits will become increasingly strong. As the hype fades in the later stage, focusing on whether the demand can be fulfilled will be the main factor in price fluctuations.

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• Shanxi Gujiao Observation Site