Looking at the trend of the iron and steel industry in August, the overall trend is downward, mainly due to two reasons: one is the rapid rise in raw material costs. According to the relevant data of Chinese Steel Association, the purchase cost of domestic iron ore rose 19.88%, imported ore rose 29.13% and scrap steel rose 10.03% from January to July. However, the increase of material price is far from keeping pace with the increase of production cost, which results in a sharp shrinkage of profit margin of steel mills and a decline in the overall benefit of the steel industry. As the largest steel producer and consumer market in the world, China is also the largest importer of iron ore in the world. However, due to the high concentration of mining enterprises and the low concentration of iron and steel enterprises, iron and steel enterprises have been in a weak position. Therefore, although the iron ore price began to fall sharply in August, the finished product price also fell. The direct consequence of the accelerated price decline is that the profits of steel mills are also shrinking, and the profits of steel mills are still small.

　　Second, steel production continued to grow. According to the report of the World Steel Association (WSA), China’s crude steel output in the first half of the year was 492 million tons, up 9.9% year-on-year, and the proportion of global crude steel production increased to 53.2%. After deducting China, crude steel production in other countries in the world fell by 0.3% year-on-year in the first half of the year. China's crude steel output in June 2019 was 87.5 million tons, up 10.0% year-on-year. China's crude steel output in July 2019 was 85.2 million tons, up 5.0% year-on-year. However, since July and August, the downstream demand situation of steel has not improved. Most steel mills choose to make profits in order to ease the pressure on capital and stocks. The excessive growth of iron and steel production leads to no increase in production efficiency.

　　The combination of the above two factors led to the overall downturn of the steel industry in August, and then predicted the trend of the steel industry that may appear in September: the medium-term downtrend is difficult to change, but there should be a rebound in the middle September.

　　First, looking at the cost, in August, due to the rebound in iron ore supply and the weakening demand, the price of ore fell sharply, and after the big drop, the price/performance advantage of high-quality ore began to become prominent. Therefore, under the condition of environmental protection and production restriction, the market will have the structural situation of speculating ore, and the ore inventory level of steel mills is not high. There should be the possibility of replenishing inventory in stages after a sharp fall in the previous period. In addition, the tension of the external environment has led to the continued weakening of the RMB exchange rate, and once market sentiment improves, this factor will also be reflected in the face of the market, if the short-term decline in mineral prices is expected to form a certain support for steel prices.

　　Secondly, looking at the supply side, since August, because the price of iron ore has also affected the price of finished products, resulting in a reduction in the profits of steel mills, according to analysts from the steel mill, there are some steel mills have been negative profit production. The profit of steel mills was compressed to the critical value, forcing many steel mills to start active production restriction, subsequent supply pressure began to weaken, coupled with the increasingly stringent environmental protection production restriction around the environment, the inflection point of steel supply has emerged. As of August 23, the weekly production of rebar fell to 3.5179 million tons, which was a three-week decline and was the lowest since April. Taking into account the 70th anniversary of the celebration, environmental protection and strict production will be a high probability event.

　　Finally, looking at the demand side, in the week of August 16, according to the same caliber survey statistics, the angle of channel steel stocks was 53,300 tons, which was 0.23 million tons less than last week. The H-beam stock was 47,200 tons, which was 0.26 million tons less than last week. Domestic steel social inventories ended the nine-week rising trend. This week (August 23-August 29), the country's major steel social stocks were 12.4693 million tons, a decrease of 296,800 tons from last week, a decrease of 364,100 tons from last month; the total amount of rebar stocks was 6,094,800 tons. The total volume of stocks was 2,441,400 tons. In the case of typhoon crossings, rainy weather is widespread everywhere, and shipments are affected, inventory declines are even more precious, suggesting that downstream demand may start to improve. In terms of infrastructure, since August, the hot and rainy weather has suppressed the release of demand. At present, these factors have begun to subside. In addition, before the 70th anniversary, there will be a possibility of rushing work in the downstream construction sites. Therefore, the market demand will appear short-term in early September. The possibility of concentrated release, the current rebar stocks have been declining for two consecutive weeks, and last week's building materials inventory was more than 200,000 tons for three days. If these two trends continue, it indicates that demand has improved. The external situation has escalated, and the impact on the global economy is still emerging. The country has also adopted a series of measures to expand consumption and stabilize growth, and steel demand is expected to remain stable.

　　In summary, the analysts form SunSirs believe that if iron ore raw material prices stop falling for so long in September, they will support steel prices. In addition, downstream demand will improve. The traditional consumption season in September-October will bring certain benefits to the market, and steel production will be limited by environmental protection policies. It is predicted that the steel market will rebound in September, but the overall trend will be adjusted according to shocks.