Since October, the steel market has once again shown ups and downs. On October 21, Ren Qingping, chairman of Shanghai Wubo Steel Structure Materials Co., Ltd., analyzed the reasons for this round of steel price fluctuations in an interview with reporters. He believes that there are three main reasons, and suggested that market participants should rationally view and rationally respond to this round of steel price shocks and maintain the smooth operation of the steel market.

Ren Qingping introduced that after the long National Day holiday, steel prices rose rapidly for a while, but the rising market did not last for a few days before it began to fluctuate and fall. The main reasons are as follows:

First, the effective demand of downstream terminals is not released as expected.

Nowadays, the real estate industry is sluggish, and the property market continues to cool down. According to statistics, among the 63 cities monitored, 55 cities saw an average drop of 47% year-on-year in new house transaction volume in September this year. During the National Day holiday, the transaction area of newly-built commercial residential buildings in key monitored cities decreased by 33% compared with the same period last year, and the property market in second-tier, third-tier, and fourth-tier cities dropped more significantly. The recent changes in the operating conditions of large-scale real estate companies have also had a greater impact on the real estate industry, and real estate companies have expressed concerns about the prospects.

The land market is also cooling. Under the superposition of financial control policies such as the "three red lines" of real estate companies and the management of real estate loan concentration, some real estate companies are facing financing difficulties, funds are not sufficient, and price limit and other control measures "dilute" profits. The superimposed market is holding a wait-and-see attitude towards the market outlook. As a result, the enthusiasm of real estate companies in acquiring land has been affected, and land auctions and suspension of transfers have occurred from time to time. The limited return of funds from real estate companies led to a continuous decline in new construction and construction areas in the third quarter, and a low rate of construction projects. Therefore, the intensity of "steel demand" in the real estate industry will be greatly weakened, and there will be insufficient power to support the rise in steel prices.

In addition, power supply in some areas of the country is tight, and power and production restrictions have a greater impact on the production and operation of the manufacturing industry. According to statistics from the China Construction Machinery Industry Association, in September, 25 major excavator manufacturers sold 20,805 excavators of various types, a year-on-year decrease of 22.9%; sales of various loaders were 9,601 sets, a year-on-year decrease of 16.1%. Although there have been signs of loosening production restrictions and power restrictions in some areas since October, the tight coal supply situation has not been effectively alleviated. The heating season is about to enter, and the power supply is based on the protection of people's livelihood, and industrial power consumption will be affected. Therefore, the strength of the "steel demand" of the manufacturing industry will also weaken, and insufficient demand is a major factor that has caused the shock and fall of steel prices.

Second, the price of raw materials and fuels has risen too quickly, affecting steel exports.

For a long time, the prices of raw materials and fuels such as iron ore, coke, coking coal, scrap steel, and ferroalloys have remained high, leading to rising production costs of steel companies and raising the ex-factory prices of steel products, which in turn affected the export of steel products. Operators of foreign trade in steel do not dare to take orders rashly.

Third, steel prices have entered a callback phase after the continuous rise.

Entering October, the price of steel rose rapidly, and the price increase was very large. The price of some steel products rose three times in one day, with an increase of about 150 yuan/ton to 200 yuan/ton, and there was once a fear of heights in the market. "The downstream end users are not very accepting of this, and most of them are waiting and watching, basically purchasing on demand, the overall market is light, and merchants are not shipping smoothly. In the second trading week of October, steel prices began to fluctuate and fall. Ren Qingping believes that the reduction in steel prices during this period is mainly a high-level profit-taking.

Ren Qingping said that the above factors have caused steel prices to fluctuate downward recently. He told reporters that nowadays, steel traders are paying more and more attention to the rhythm of the market, trying to follow the market rhythm by "recognizing the general trend, understanding the trend, seeing the variables, and grasping the trend", so that they can effectively prevent and evade. Market risk, and strive to achieve the goal of "profits when prices rise and no losses when prices fall".

Ren Qingping said that the current market environment is more complex, changeable and severe than ever before, and the business model of steel traders has been changing accordingly. "This is because there is no business model that can last forever. The business model must be changed in time according to the new market environment." He said that today's market conditions are showing "small cycles, large shocks, fast pace, and multiple changes." This requires that market participants must always pay attention to the market situation, make a reasonable prediction of market trends, and have a more sensitive understanding of the market.

"In addition to keeping pace with the market rhythm, there must be a sense of peace." Ren Qingping said, "Market participants must not bet on the market, and maintain a sense of peace. Some steel traders have improved the market and steel prices have risen. At that time, I was reluctant to sell and closed the market, thinking about making a lot of money, and rushed to hoard the goods to go to the market. The result was "I don't want to sell when the price rises, and I can't sell when the price falls." I can only lose money and lose money. So, In the complex and changeable market environment, steel traders must be more sensible and rational. They must adjust marketing strategies, change business models, prevent market risks, and achieve profitability in accordance with changes in the market rhythm."