Since November, the whole steel market has turned sharply, and this week's decline has increased significantly. Data show that the rebar price in the major national markets has decreased by 300-750 yuan / ton since November. In line with this, China's steel industry's profits in the first three quarters of this year increased by more than 70% compared to the previous year, reversing the inadequate profits and even losses over the years, achieving the best performance in history.
Why did steel prices continue to fall in the best year of performance? What are the challenges that steel prices need to balance? On the evening of November 24 CCTV Finance Review was invitedLi Xinchuang, Dean of Metallurgical Industry Planning and Research Institute, and Guo Liyan, Chinese Researcher of the Academy of Macro EconomicsGuest studio, deep analysis.
Steel prices continue to fall Who is pushing their hands?
Li Xinchuang: Market expectations are not optimistic, the main reason for the decline in steel prices
Li Xinchuang, Dean of Metallurgical Industrial Planning and Research Institute:First of all, the downward pressure on economic growth, especially on automobile investments such as the decline in real estate investments, and similar situations in the automobile sector have increased, and secondly, steel prices are at high levels, and companies are trying to expand production to make better profits. Some production capacity renewal projects and transformation projects have been put into production and the supply has expanded further, the market supply has exceeded. Third, trade friction has direct or indirect effects on market expectations. This is the three most important factors that cause prices to fall to this stage.
Guo Liyan: The pressure extends from the middle to the middle.
China Macro Economic Research Institute Guo Liyan Researcher:According to the data of the steel trade e-commerce platform, the decline in transaction data was more noticeable in November. While the inventory of major steel mills rose downward, the social inventory fell faster, indicating that pressure is spreading downwards. Social stocks, that is, traders are reluctant to buy goods, and accordingly there is an increase in stocks of upstream steelmakers, which has led to price cuts.
Li Xinchuang: Steel prices may fall, but demand for support
Li Xinchuang, Dean of Metallurgical Industrial Planning and Research Institute:First, there is a place for steel prices to drop, but I do not think it will fall significantly. All of China's economy will continue to develop steadily, so steel demand will remain high; secondly, if the steel price is too low in previous years, the price of this year will be required to some extent; R & D requires a lot of investment, so the healthy development of the industry also requires a reasonable profit support, which is also an internal support.
Steel prices should be stabilized, where is the challenge?
Li Xinchuang: Controlling production, stabilizing the market
Li Xinchuang, Dean of Metallurgical Industrial Planning and Research Institute:It doesn't matter to control production and expand production blindly.2016Year2018National capacity1.5Billions of tons, also stole1.4In recent years, along with technological progress in various aspects of the productivity of industrial labor, the production capacity of 100 million tons of strip steel has created conditions for the improvement of the market price, while also significantly increasing production and increasing production. We have to deal with the arrangement seriously.
Guo Liyan: Doing a good job is the cornerstone of stable prices by adding high-level greening.
China Macro Economic Research Institute Guo Liyan Researcher:I don't agree with the market about a bull market and the steel market, which has a bear market. The supply-side structural reform is actually a combination of additional addition and subtraction: the lower limit is invalid, which is the dividend of the extraction, but with the price increase, which allows many steel enterprises to work better, while the next step is to supplement .
Before reviewing in Jiangsu and Zhejiang, some steelmakers have begun to upgrade their products at recent price decreases. When I return to visit,11thThis month's price fell, not affected, because the decline is not the main steel products. Therefore, we believe that this high level and green development is an important cornerstone to balance future prices.
Li Xinchuang: High quality development is the key way for steel mills
Li Xinchuang, Dean of Metallurgical Industrial Planning and Research Institute:The whole country is moving towards high quality development and the steel industry must adapt to this general trend. First, we should do a good job in green and low carbon development. Second, we need to accelerate the restructuring and make the industry develop more regularly. The third point is to accelerate steel. Intelligent production enhances the productivity and productivity of steel, while enhancing standards and brand development, so that China's steel is really improving its operating level.
Guo Liyan: This price decline is the inevitable process of placing supply and demand on the market to dynamically adjust.
China Macro Economic Research Institute Guo Liyan Researcher:You don't have to worry about whether the price will return to the loss of the whole industry a few years ago. Today, the industrial structure of the steel industry and the distribution of the entire profit situation are not the same as before, but a gradual result of supply-side structural reform. As a competitive industry, the future of the steel industry industry chain should be a dynamic process of adaptation from production to sales, profit and loss.
Black industry chain snow game Who is eating at the mouth of the tiger?
Now everyone in the black industry chain is concerned about the profit of steel production. When we look at last year, I saw the price of rebar as an example. He's been down recently. Is the price of hot rolled coils worse than the rebar price? As some new industries are being launched, the future capacity of hot rolled coils will exceed 330 million tons. The price of raw materials is high in the snow, willing to produce the steel industry and willing to pay more for the raw material price. Coke prices have risen steadily, coking coal prices have increased steadily, and scrap prices have recently dropped. This shows that the upside short transaction is tightening the profit and the short-term steelmaker is starting to buy raw materials. This logic also applies to coke and iron ore for some time to come.
Terminal demand, investment speed of 5.7%, real estate growth rate continued to decline, 9.7%, some construction and installation investments in real estate investment, construction investments in September -3.45%, -3.24%, installation engineering% -7,97, the first -7,28%. Upon the demand for steel, real estate investment can be moved to drag. From now on, the short-term demand for steel is about to enter the off-season. The demand in the region is slightly weak. What should I do if the traders are afraid to buy goods, if I cannot sell the goods in the next ten or twenty days? In the long term, the growth rate of long-term fixed asset investments declined.
The investment is divided into three parts, real estate, manufacturing and infrastructure. This year, the real estate sector has undergone more significant changes. The growth rate of the new construction area and real estate construction area is good and Jian's rejected. After everyone gets the land, they hope to enter the sales process as soon as possible, so it needs to be hurried to enter the sales department to control the cost and control the construction progress. The real estate sector changed its position this year between June and July, but it will not start until May, but several construction sites will begin at the same time in July. What is the reason? The market may change and land must be realized, otherwise the property business will lose money in the future. The growth rate of the real estate purchase area has changed and the growth rate in October was negative by 10%. In the current situation, the construction of the real estate sector is relatively normal and some are in a hurry. Demand seemed good The demand in last week was slightly down.
Despite the restrictions on the construction of environmental protection last year, despite the restrictions this year, solid demand is quite good in May and July this year, but it is estimated that there is no environmental shutdown in winter, environmental stagnation is not expected in winter, and it is from the north to south in the construction season. . The real estate sector has an expected turning point: Although the accumulated funding sources are now at a relatively stable growth rate, they saw that their expectations for the future changed with changes in real estate companies. Such expectations will change the pace of land acquisition and will also change the speed of investment, which will lower down steel demand, especially rebar.
The production investment is recovering and the industry will naturally invest when it makes a certain profit, because it wants to expand its production capacity, or hopes to undertake technological transformation or invest in environmental protection requirements. What should I do when profit falls? It is unstable whether the growth rate is stable and the rate of profit of industrial enterprises has started to decline.
The growth rate of infrastructure investments is stable and investment growth rate is very low. How eager is the investment infrastructure of the local government in the context of large local debt? Now a question mark. As local authorities are more concerned about responsibility, responsibility cannot be taken if new debts are generated. From a long-term perspective, the growth rate of infrastructure investments will not increase. In a transition period between China and the new and old growth models, it is certain that the transition period, the new growth model is not shaped and the old growth model is decreasing. Even so, we must trust the future economy of China.
The highest season for steel consumption is about to be completed, and the latter should probably start from the last weekend. There is a sign that traders know from plant steel mills, for example, that traders demand goods from steel mills and that steel mills usually only have two specifications or have only one specification and are pulling out. Last week appeared and I wanted everything, although the price and quantities were not evident, it was estimated that the steel mill stock will occur.
Apparent consumption is increasing by the end of this year … The consumption in September was 91.55 million and in September it was 92 million. From high-frequency data, the national construction materials transaction began to decline significantly last week.
The traders are more cautious because they are about to enter the off-season in December. Steel social inventories fell, intermediaries did not receive goods and stocks of major steel companies rose. Is there a decline in steel mill stocks, a passive decline or an active decline? If the active decline means that the steel mills are starting to sell, such a sale price will not be as supportive as the price, but there will be pressure. Lange Steel Trade Purchasing Managers Index has become less interested in everyone.
In December, when winter warehousing began this year, the attitude of steel trading enterprises and steel producers was completely reversed. In the spring, steel trading firms have little money to produce goods, some time ago, they changed with steel trading enterprises, everyone was seriously injured, and if steelmakers do not pay more favorable price to this winter, the interest of steel trading enterprises in winter storage is not high. With the problem of the next year, no one dares to talk about the downward demand for next year after next year to acquire and sell steel. The macro is so difficult that in such a difficult situation, the new Politburo meeting still does not say the real estate market has begun. In the future, steel products, especially construction materials, can be partially suppressed. The demand for total steel products in the coming year may be slightly weaker.
In October, the data on the production and sale of excavators were relatively good, signs of decline were seen The growth rate of cars was 10%, a decline of 10%. This suggests that there are some problems with downstream consumption, including other symptoms.
Steel production, pig iron production in October increased by 67.74 million tons, 12.87 percent year on year, crude steel 9%, rebar increased by 0.08% and some yarn production was restricted. The ratio of steel to pig iron production and the production of short-term steel producers are gradually released. Short-term steel production is subject to profit restrictions, and if this segment is destroyed, the market to continue to follow will decrease.
The production limit has been limited since the last few days since spring, but it is stated that the production has not decreased much after the production limit and that our production has been passivated by environmental protection. Steel companies in the last two years are in good condition, coke coal enterprises are in good condition, environmental protection investments are relatively large, and a steel mill affected by environmental protection costs may increase 200-300 yuan per tonne. We already have some equipment to meet the requirements. In the second dimension, the profit of the steel industry is maintained at a high level. In the case of protection of the environment, other technical measures can be taken to increase the output. This is to see the short term scrap addition phenomenon. The final result is that the steel output is not output steel. Falling and rising.
In the index of steel industry purchasing managers, everyone has a lot of interest because of the high profit. When does production decrease? Only when the profits of steel companies are squeezed to a certain degree, production decline occurs. Recently, the decrease in profits, environmental protection, the rate of blast furnace operation, daily average crude steel production, this effect has not been able to change market expectations. At the end of the year, the medium demand turned into an intermediate supply situation that did not benefit much from the supply and demand relationship.
This is the main company's rebar production and wire production, because the profit margin is relatively high. Steel export volume is quite low and steel export volume is quite low. Looking at the inventory of steel mills, the data published by the China Iron and Steel Association show that there are accumulated libraries. The next question is whether production and cut insured prices or make a sale? From the current perspective, the output seems not to fall too much, so the accumulation process will continue. If the stock is up to some degree, the price may fluctuate as the steel market starts to sell.
Iron ore imports remained high, but imports declined in October. Shipments may be restricted by trading profits, and if the price of the mine emerges and the spread comes out, many will be willing to import it. The market reflects the trading profits People from the perspective of imports and production think that there is no shortage of supply. Where's the whole focus? It is a game between mines and steel mills. In September, the price of minerals increased. Meanwhile, steel mills of steelmakers were renewed, and the number of days on November 9 rose to 29, a relatively high level in recent years. Then, we must note that the steel factory rhythm has stopped. If stopped, the shipments will be reflected in a short time. Looking at the current situation, steel ore inventories have emerged. Under normal circumstances, the supply power may decrease. From the current point of view, it is still in a relatively high position.
Local mining is relatively weak and has little impact on mineral prices. When the price of iron ore is compressed, when short processing output is compressed to a certain degree, long process compression starts from scrap steel, mainly from imported mines.
The coke source is not undulating and the production is relatively high. It should be noted that the coke plant will remain at the upper limit of production and the capacity utilization rate will decrease every year. As the production interest of steel companies in the future begins to increase, it can be determined that coke supply is affected, like next spring. Recently, steel mills have been revamping their coke inventories, while some companies have compensated them and some have not been fully filled. Now, in a very delicate process of price negotiations, the number of coking coal facilities is at 100, while some steel mills have fallen by 50 percent and are now relatively stable. When the coke renewal is completed progressively, as the steel production profit is compressed, it may be at a certain point in the future, and the spot price of the coke may fall in the middle of the next month. Where's the core? Steel production is the center of profit.
When steel production profits begin to decline, production of steel mills increases production and reduces costs, so profits can be guaranteed a little, but when steel prices continue to fall, we'll see upward pressure pressure. As steel profits continue to fall and fall, steel companies will see a decline in production. The main focus of the core market in the future is the profitability of steel production.
From the current point of view, when the steel demand is about to enter the off-season, the middle demand reflects the intermediate supply, the merchant reflects the intermediate supply, when the merchant goes to the winter shop this year, only when the price is right. Every year, there is no winter storage, and each year there is winter storage, the key is when the price is right. When we talk with North traders, sometimes 3500, if appropriate, the steel mill is appropriate and not suitable, I'll play the game in the future.
Steel production is not as good as expected China Steel Union announced some data, but the decline is very limited. Steel mills are renewing the rhythm, and at the beginning of the decline in profits, steel mills are more willing to boost production. Raw material demand is quite good, but when profits continue to fall to a certain level, profits go up. Coke, short-term supply From the present point of view, coke producers rarely have stocks, because steelmakers have more products demand. Second coking attempts have not had too many stocks identified by their ability to resist risks. Most coke enterprises do not have storage capacity. Now there is a turning point: This turning point may end in the renewal of the steel mill.
We have to pay attention to the profit of steel production. Generally, the profit of steel production is decreasing. Based on the current situation, long-term production initiatives of rebar producers will have significant stock pressures, while the price reduction will lead to lower production efficiency and a drop in production profits. Probably there are different opinions in the recent past, because out of season, profits in the industrial chain are trapped. When we talked with steel companies recently, everyone is pessimistic, as it was the case last year, macro-pessimism next year will be transferred to industry. The decline in steel prices this year may be higher than last year. Traders' winter storage timing will only appear when the spot price falls sharper. (Zhonghui Futures Li Wei)Back to Sohu & see more
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