The "Black System", which has been mad for quite some time, has finally started to ebb, and the prices of commodities, including steel, have fallen in varying degrees, with some of the steel varieties falling by about 30% per one months. This has caused many participants in the black industry chain to start worrying after one years of dividends.
Market
"Black department" began to fall last month
Data show that since the beginning of March, the domestic price of iron ore and steel has seen a small wave of decline, after the successive soaring "black system" began to be the entire industry chain look empty. According to media reports, since the middle of March, domestic steel prices fell more than 20%. Take iron ore powder, for example, one months ago the price is 860 yuan per ton, now has dropped to 600 yuan, the decline of more than 30%. The same is true of iron ore prices, when the domestic iron ore price index surpassed 850 points at the beginning of March, reaching its peak this year, and then began to fall to 620 points in late April, down nearly 30%. Since March, China's steel products prices have also begun to decline.
The decline of the "black system" has directly affected the PPI and other important economic indicators. China's current industrial prices have been higher than the year-on-year rise, the future industrial prices may face pressure to fall. The National Bureau of Statistics shows that last month, China's PPI rose 0.3%, year-on-year growth rate fell 0.2% to 7.8% last month, the end of 14 consecutive months of recovery.
Analysis
Steel output rises but demand for market is stagnant
The prevailing view in the market is that changes in supply and demand have led to a reversal of the "black" price. According to statistics released by the National Bureau of Statistics, March, the country's crude steel, pig iron and steels output of 72 million tons, 62 million tons and 96.76 million tons, respectively, year-on-year growth of 1.8%, 1.3% and 0.7%. Among them, crude steel daily output reached 2.3226 million tons, year-on-year growth of 6.42%, a record high. In the first quarter of this year, China's crude steel production of 201.1 million tons, year-on-year growth of 4.6%. According to industry forecasts, this April China's steel production is expected to again high innovation. But the increase in steel consumption is clearly not in sync with the increase in output. Data show that the first quarter of this year, China's crude steel apparent consumption of only 183 million tons, although the fourth quarter of last year, the total crude steel apparent consumption slightly higher, but with institutional analysis, the actual consumption of crude steel in the first quarter of this year is likely to be lower than in the fourth quarter of last year, given the apparent increase in steel inventories (including steel mills and social inventories) in the first quarter of this year.
In fact, the current Chinese economy in the traditional industry demand for steel has declined, but high-end manufacturing, emerging industries demand for high-end steel will increase. Therefore, although the overall view of China's steel consumption is expected to remain stable and slightly increased, but in fact, the demand structure has changed significantly, which also determines the future trend of steel prices.
Attention
Go to capacity will affect future steel price trend
For the sharp collapse of the steel price trend, the industry pointed out that the future trend of steel prices will depend on the country to a large extent the implementation of capacity policy, especially to deal with the "steel" strength. "And from another point of view, the ability to stabilize steel prices to prevent excessive rise, but also about the key to the smooth progress of capacity, so from the national level can not let the black system of excessive madness." "There are people in the industry.
China is the world's largest consumer of steel, steel consumption accounted for half of the total consumption of global steel. However, in 2015, China's steel industry, steel consumption declined, steel prices fell, only the Chinese iron and steel Industry Association member Enterprises lost nearly 80 billion yuan. In this respect, China put forward to the steel industry to resolve excess capacity to extricate itself, last year, China's steel industry swung to profitability, to achieve 30.378 billion yuan. This year, the overall operation of China's steel industry in good condition, the first two months CISA member Steel Enterprise cumulative profit of 12.811 billion yuan, sales profit margin 2.41%, up 5.5%. As steel prices gradually rebounded, industry confidence began to gradually recover. However, in the process of recovering steel prices, irrational speculation has also made the steel industry has a new risk, especially with institutions to start to speculate on the capacity of steel prices. According to our country's steel production capacity target as of 2020, we will resolve the production capacity of 100 million tons to 150 million tons. For now, this goal is expected to be completed ahead of time. Last year, China has completed the goal of resolving 45 million tons of crude steel in advance, and this year set a further reduction of 50 million tons of crude steel targets.
In addition, the government plans to ban "steel" in a comprehensive manner before June 30, 2017 is a more significant impact on the steel market. The so-called steel, refers to the scrap steel as raw materials, through the small smelter induction furnace melting as raw materials rolled out of the steel, this steel because of the failure to effectively carry out components and quality control of production and the existence of quality risk. A steel business yesterday told Beijing Youth newspaper reporter, if really can according to plan at the end of June, that will obviously have a significant impact on the price of steel, but a number of steel companies in the North Green newspaper interviewed all said that the deadline to complete the task is still very difficult.
Expected
Agency says medium-term steel prices still face downward pressure
According to the latest steel weekly data released by the agency, last week domestic steel prices showed a first-suppressed but overall decline is still apparent, and this week's steel prices are expected to be dominated by consolidation. Last week, although the domestic steel stocks slightly declined, but compared to the same period last year still rose 17%, still at a high historical level. Since the two quarter is the traditional off-season for steel demand, it is expected that the recent domestic demand for steel is unlikely to rebound, so the medium-term steel prices still have continued to fall pressure.