Industry News

The issuance of local government bonds across the country is accelerating, and the peak is expected in the third quarter, which is good for the steel market

According to the latest data, in the first half of this year, the total issuance of local government bonds nationwide has exceeded 3.5 trillion yuan. Although it has decreased compared with the same period last year, the scale of new special bonds issuance still exceeds 1.5 trillion yuan, showing the active actions of local governments in the context of stabilizing the economy. Entering the second half of the year, with the gradual recovery of the economic situation, various regions are accelerating the deployment of local debt issuance. It is expected that the issuance peak will be ushered in the third quarter, and the scale is expected to reach about 3 trillion yuan.

This move not only reflects the support of local governments for infrastructure construction and major projects, but also brings positive signals to the steel market. With the arrival of the peak of local debt issuance, it is expected that infrastructure investment will further accelerate, thereby driving the growth of steel demand and forming a positive trend for steel prices.

In order to further enhance the sense of gain of business entities, the Ministry of Finance has also innovated its funding policy. Recently, the Ministry of Finance has jointly implemented a fiscal interest subsidy policy for equipment renewal loans with multiple departments, and has specially adopted the "two pre-allocation" mechanism. Specifically, the Ministry of Finance has issued budgets to provincial finance departments in advance and allocated interest subsidy funds in advance; provincial finance departments have implemented this policy through 21 commercial banks, regularly allocating interest subsidy funds to their provincial branches, and then making actual settlements based on actual loan conditions. This mechanism has effectively reduced the financing costs of enterprises, boosted their confidence and enthusiasm for equipment renewal and technological transformation, and further promoted the growth of investment and consumption.

At the same time, good news also came from the international financial market:

Federal Reserve Chairman Powell said at the Central Bank Forum hosted by the European Central Bank on July 2 that the United States has made significant progress in inflation. This positive statement has boosted market confidence in the Federal Reserve's future interest rate cutting cycle. The market generally believes that the Federal Reserve is more likely to cut interest rates in September. This expectation has further boosted market confidence and has had a positive impact on many industries, including steel.

Taken together, the acceleration of local government bond issuance across the country, the continued growth of infrastructure investment, the implementation of fiscal interest discount policies, and the positive expectations of the international financial market have jointly constituted positive factors for the steel market. With the combined effect of these factors, steel market demand is expected to increase further and price trends are expected to remain stable.

In the future, with the further implementation of policies and the continued recovery of the market, the steel market is expected to usher in a broader space for development. At the same time, various local departments will continue to use various methods to support large-scale equipment updates and the replacement of old consumer goods, providing a strong guarantee for the stable development of the steel market.

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