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Will scrap steel plummet in 2020?

Scrap steel will plummet in 2020.

Judging from the annual steel price trend, the production date of capacity replacement will be ushered in 2020, and the supply pressure is still relatively high. The output of crude steel is expected to exceed 654.38 billion tons, and the growth rate of output may exceed the growth rate of demand. The center of gravity of steel prices will continue to move down, and the production date will mainly focus on the fourth quarter of 2020, and the trend in the first half of the year will be better than that in the second half. It is worth noting that the accumulation of steel stocks accelerated before the holiday. According to past experience, one month after the holiday will usher in the peak of steel inventory accumulation, and steel prices will have downward pressure, but the space is limited.

Looking forward to 2020, the pressure of global economic slowdown is still there, and macro countercyclical adjustment will continue to increase. On the one hand, infrastructure investment, as an important starting point for "steady" growth, is expected to start early next year with the support of special debt to boost the steel market. On the other hand, today's LPR quotation is flat, and the downward expectation fails, which means that the probability of interest rate cuts by MLF and OMO will increase after the year.

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Application and industrial development status of scrap steel

Scrap steel can be divided into smelting scrap steel and non-smelting scrap steel according to its use. According to GB/T4223-20 17 "Classification Standard for Scrap Steel", according to its overall size and weight, scrap steel for smelting can be divided into eight categories, namely, heavy scrap steel (Grade I and II), medium scrap steel, small scrap steel, light scrap steel, packed blocks, scrap steel (Grade I and II), slag steel and steel chips. From the source of scrap steel, it can be divided into three types: in-plant scrap steel (self-produced scrap steel), processed scrap steel and old scrap steel (depreciated scrap steel), among which processed scrap steel and old scrap steel are collectively called recycled scrap steel.

Steel mills can generally recycle their own scrap steel for use, so self-produced scrap steel generally does not enter the social circulation link, and the recovery rate of this part can generally reach 100%. The processed scrap steel produced by the downstream manufacturers of iron and steel products, such as automobiles, household appliances, machinery and other manufacturers in the process of production and assembly, has good color and is less difficult to recover, so the recovery rate is generally higher. Depreciation scrap mainly refers to the scrap produced after the service life of terminal cars, buildings, mechanical equipment and other products expires, which is the most difficult to recycle among the three kinds of scrap and the largest source of scrap.