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The recent decline in real estate investment has led most investors to be bearish on ferrous metals.Zyngapoker1bchipsfree2021But the market is limited by overcapacity in the short term. The iron and steel industry is faced with the problem of overcapacity, but output control helps high-quality economic development, the improvement of industry structure and enterprise maturity will affect price fluctuations, investors need to pay attention to the balance of supply and demand.

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The sharp decline in real estate investment in recent years has led many investors to be pessimistic about the ferrous metal market.Zyngapoker1bchipsfree2021They believe that the reduction of steel for housing construction will not be effectively replenished in other ways, thus exacerbating the problem of overcapacity. Although this view is reasonable in the long run, its impact on prices may not be significant in the short term. There is a problem of capacity release between the problem of overcapacity and the actual excess supply and demand, which is affected by many factors, including industrial policy, industry structure, profit situation and so on. In terms of industrial policy, for industries with excess capacity, clearing by market competition alone will face a series of problems. Take the iron and steel industry from 2014 to 2015 as an example, the phenomenon of time extension and Bad money drives out good appeared in the process of capacity loss. Therefore, government intervention and intervention is particularly important. At present, the industrial policy of the iron and steel industry has shifted from capacity control to output control. Although some investors are skeptical about the implementation of the output control policy, in the long run, production control is necessary to achieve high-quality economic development and short-term reduction in energy consumption per unit of GDP. Industry structure has a direct impact on the business strategy of enterprises. In the iron and steel industry, iron ore is close to oligopoly, while the homogenization competition in the steelmaking field is more fierce. In recent years, the concentration of the iron and steel industry has increased significantly, and the product differentiation has become more obvious. In addition, capacity control is stricter and barriers to market entry are higher. These changes have a significant impact on iron and steel enterprises, enterprises no longer consider through vicious competition and other means to expand production capacity. For iron and steel enterprises, steelmaking profit is a direct factor in making production plans. Although surplus industries should not make high profits from a long-term perspective, profits may increase in the short term due to factors such as seasonal mismatch between supply and demand. Mature iron and steel enterprises will take into account many factors such as orders, cash flow and so on, not just profits. Therefore, it is impossible to predict a sharp increase in iron and steel production simply because of the rebound in steelmaking profits. To sum up, for future steel prices, investors cannot judge a long-term decline on the basis of overcapacity alone. Supply characteristics have changed significantly, investors should pay attention to the rhythm of supply and demand matching to grasp the market.