On the evening of March 1, the "National Five" real estate policies were further tightened. Previously, the five measures introduced by the government were relatively moderate, and the market responded with indifference. The upward trend in housing prices remained unaffected, which forced the authorities to roll out more stringent regulations quickly. Looking back over recent years, numerous real estate control measures have been implemented, including the "Four National Policies," "Ten New Policies," "Five New Policies," "Eight New Policies," "Fifteen Beijing Rules," and "Five State Policies." However, this is unlikely to be the end of the policy tightening cycle.
The author believes that these measures are more like temporary fixes rather than long-term solutions, and their impact on the steel market is mainly psychological in nature. After the implementation of the "State Five," the real estate sector, stock markets, and the broader economy experienced significant fluctuations. In particular, the steel industry saw a sharp drop in market confidence, leading to pessimistic expectations. Steel prices and stock values fluctuated violently, with spot prices continuing to decline.
As of the close of March 1st, the average price of Ф25mm third-grade rebar in major domestic cities was 3865 yuan, down 14 yuan from the previous day. Similarly, the average price of Ф6.5mm high line was 3735 yuan, also down by 14 yuan. Despite this, crude steel production, steel inventory levels, and billet stocks in the Tangshan market all showed steady increases, indicating a growing supply pressure in the steel sector.
According to the latest data from the China Iron and Steel Association, the average daily crude steel output of mid- and large-sized enterprises in mid-February reached 1.719 million tons, up 1.01% month-on-month. Nationally, the estimated average daily crude steel production was 2.006 million tons, an increase of 0.9% compared to the previous month. While the upstream steel supply is gradually recovering, downstream demand remains weak. Although there has been some improvement in recent days, it is still difficult to form a large-scale demand rebound in the short term.
Although the full implementation of the "National Five" may take time, it has already begun to affect the sentiment of steel traders. However, the author believes that while the short-term price trends may be impacted, these policies are unlikely to have a fundamental or disruptive effect in the long run. The main reason is that steel production costs remain high, which will support the price floor. Currently, imported Indian iron ore has broken through the $160 per ton mark, and rail freight rates have risen by 13%. Additionally, as the national "**" meeting approaches in early March, new leadership is expected to bring about some positive and favorable policies. Furthermore, according to recent railway news, 38 infrastructure projects worth RMB 420 billion will be fully launched, which will drive demand for the steel market.
In conclusion, neither steel mills nor traders are willing to make bold moves at the moment. This cautious approach stems from the lessons learned from last year's losses due to bad loans. The current steel market remains unclear, and downstream demand has not yet improved. Therefore, the ongoing narrow price adjustments are likely to continue for some time.
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