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Industry trends

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The normal return of the steel industry, the steel price correction space is not big

Release date:2018-12-21 The author:www.xapyyj.com Click on:

After the New Year's Day in 2018, the domestic steel market continued its decline, especially in the construction steel market. As of January 10, the national average price of 20mm third-grade rebar was 4,144 yuan / ton, and the cumulative decline in the first half of January was about 310 yuan / ton, a cumulative decline of nearly 760 yuan / ton in the past month. On the same day, the average price of 4.75mm hot coils nationwide was 4,248 yuan/ton, which was about 190 yuan/ton in the past month. The price difference of spiral rolls reversed the upside down situation.

Since entering the heating season in November last year, the building materials market has ushered in a big upswing. With the increase in the past month, is the bottom of the market proven? How will it work later?

In some areas, the blast furnace resumed production, steel demand continued to shrink, and the contradiction between supply and demand increased.

Due to the correction of the steel market in the past month, the profit of the steel industry continued to decline. The author estimates that the current gross profit of rebar steel of Tangshan Steel Plant (cost does not include three expenses, depreciation of fixed assets, etc.) is about 650 yuan. The production enthusiasm of steel enterprises is still there. Recently, blast furnaces in some areas have resumed production.

However, in the heating season, Beijing-Tianjin-Hebei Steel Plant's production limit is still strong. For example, the capacity utilization rate of Tangshan blast furnace in the first week of January is still less than 60%. The utilization rate of blast furnace capacity of 163 steel mills nationwide is 78.39%, slightly higher than the level in December. Overall, the average daily output of crude steel in China is estimated at more than 2.1 million tons in January, slightly higher than last month, showing a slight increase.

Since mid-December 2017, domestic demand for downstream steel has continued to shrink. In the winter rain and snow weather, demand overdraft, pessimistic expectations and other factors, the volume of steel market in the first half of January 2018 is still declining, the contradiction between supply and demand is further intensified, and steel inventories are rising week by week.

Steel stocks rebounded in stages, and the overall level is still lower than in previous years.

According to my steel network monitoring, the inventory of steel samples of the national sample steel mills last week was 4.794 million tons, up 3.5% on a week-on-week basis and lasting for four weeks, down 14.2% from the same period of last year.

In the same period, the inventory of steel in major cities nationwide was 8.351 million tons, up 5.3% on a week-on-week basis, and climbed for three weeks, down 15.1% from the same period of the previous year.

In recent weeks, steel inventories have rebounded, mainly due to the sharp rise in building materials inventories and greater pressure on supply and demand. In addition, we should also note that compared with the same period of last year, steel inventories are still at a low level, which is different from the destocking phase of 2012-2015.

The price of the steel mill is high, the loss of the business is basically fixed, the basis of the current period is basically repaired, the macro economy is stable, and the steel price adjustment space is not big.

Due to weak demand for downstream steel, the bearish factors in the steel market dominated in the short term, but after a month of adjustment, the market also showed some positive signals.

First of all, the recent mainstream steel mills issued a new round of price adjustment policy, Baosteel's ex-factory prices in February and March were stable. Although the mainstream building materials steel mills such as Shagang and Zhongtian Iron and Steel have significantly lowered the price in mid-January, the ex-factory price is significantly higher than the spot market. The current ex-factory price of Shagang 20mm three-grade rebar is 4,350 yuan / ton, which is 360 yuan / ton higher than the Hangzhou market. The price cuts of mainstream steel mills are significantly smaller than the market price. On the one hand, they have increased the pressure on middlemen's business operations, and on the other hand, they have the intention of controlling the market to slump.

Secondly, the rectification of the rebar period is basically repaired. The current closing price of the main rebar 1805 contract is 52 yuan/ton lower than that of the Shanghai market, and the discount rate in December 2017 was as high as 1,000 yuan/ton. The arbitrage space of the rebar period is not large, and the power of low-priced shipments in the spot market is also insufficient. Investors are waiting to see a strong mentality.

Third, the global economy is still on the recovery track. In the first quarter of 2018, China's imports and exports are expected to increase. The domestic economy has continued to stabilize, and physical retail sales have continued to pick up. Premier Li Keqiang expects that the national GDP will increase by 6.9% in 2017, and the bond market, stock market and housing market will run smoothly, and the leverage ratio of enterprises will stabilize.

In short, in the short term, the demand for downstream steel is weak, and there is a backlog of steel inventories, and there is still room for adjustment in the steel market. However, with the sharp adjustment in one month, the profits of the steel industry, the current basis of the rebar period, and the spread of the spiral volume have all returned to a reasonable level. The market fears and emotions have obviously been released. It is expected that the downside will not be large in the later period. Considering that downstream users still have winter reserve demand before the Spring Festival, there is still a wave of rebound in steel prices before the Spring Festival.

    Xi'an Pengyuan Metallurgical Equipment Co., Ltd. was established on February 20, 2017. The company is located in Xi'an, Shaanxi, China. Its main business is the design and manufacture of metallurgical equipment (electric arc furnace, submerged arc furnace, ladle refining furnace, other refining furnaces and metallurgical auxiliary equipment). The company's vision is to become a service-oriented leading enterprise that can provide users with advanced and applicable complete smelting technology solutions. The company is determined to make “Pengyuan Metallurgy” into the electric furnace industry. Excellent brand. Pay attention to us, keep abreast of the latest developments in the industry, hotline: 13819831910.

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