Three steel prices drop Shagang want to stably support

Baosteel, Wuhan Iron and Steel and Anshan Iron & Steel issued pricing policies for September on August 13, 14, and 20 respectively. Today, Shagang introduced a price policy in late August. The downturn in downstream demand and the weakening of cost support led to a frequent drop in the prices of the three major steels and Sha Steel’s desire to stabilize.

Major steel mills continue to lower prices this year. The prices of the three major steel mills have been continuously lowered since the second quarter of 2012. Among them, Baosteel has lowered the order prices for three consecutive months. The cumulative decline of the main varieties in the past three months was 260-610 yuan/ton, and Wuhan Iron and Steel and Angang have been four consecutive months. Reduced the order price, the cumulative decline in the main varieties over the past 4 months reached 100-700 yuan / ton and 150-600 yuan / ton;

This was mainly due to the unfavorable influence of the order organization situation caused by the depressed downstream demand since the second quarter; at the same time, iron ore and coking coal prices originally used as “cost support” began to fall as the profitability of the steel industry deteriorated, and the iron ore price (61.5%) PB powder tax price) has fallen by RMB 200/tonne (-20%) in the past four months, the main coking coal price has dropped by RMB 170/tonne (-12%), and continuous innovation has led to lower raw material prices for steel prices. Stay in the descending channel.

Shagang introduced today's price policy at the end of the year. The rebar base price held steady, and the factory price of some construction steel was lowered slightly: the high price was lowered by 10 yuan/ton. The current price of Ф6.5mmQ235 general carbon high wire was 3620 yuan/ton; the disk screw was lowered by 30 yuan. / Ton, is now listed on the 8mmHRB400 disk coil price of 3720 yuan / ton. In mid-August, the ex-factory price of rebar remained unchanged, and the steel mills did not have many preferential policies for traders. In the middle of the second half of the year, the overall transactions in the major markets in East China continued to fall into a slump, the market performance was cautious, there was no ups and downs, and the weak and stable became General consensus.

The difference between the ex-factory price of the three major steels and the market price is higher than the historical average, and there is still room for price reduction. According to calculations, the average price spread between Baosteel's hot and cold rolled steel and the market during 2010-2011 was 1,172 yuan, 879 yuan per ton, that of Wuhan Iron and Steel was 1,453,707 yuan per ton, and that of Anshan Iron and Steel was 27,35 yuan per ton. Currently, the difference between the ex-factory prices of Baosteel, Wuhan Iron and Steel and Anshan Iron and Steel and the market price, most varieties are still higher than the historical average of two years, and they are in an upside-down state. The ex-factory price of the three major steels still has room for downward adjustment.

It can be seen that the dominant steel mills are not optimistic about the domestic steel market in September.

Some steel traders and people in the industry believe that Baosteel continues to lower its ex-factory prices by a factor of up to RMB 180/t, and some steel products also offer certain concessions, such as those produced by Baosteel’s Meishan Iron and Steel Company. Directly on the basis of factory prices based on preferential 200 yuan / ton. This indicates that the possibility of a sharp rebound in the steel market price in September is unlikely.

However, some steel traders believe that some steel prices of Baosteel itself are higher than the spot market price, even if the ex-factory price reduction in September is still higher than the current spot market price. Therefore, the adjustment of Baosteel's ex-factory price policy will only have a certain impact on the psychological level, and will not have a substantial impact on the steel market.

From the perspective of downstream terminal demand, the central government recently proposed to “stabilize growth in a more important position.” Various ministries and commissions have successively introduced some policies to stimulate economic growth. At the same time, all local governments have successively issued a series of policies to ensure the “steady growth” of the economy, and may later stimulate steel demand, so that the demand for “Golden 9 Silver 10” is better than in July and August, thus supporting the “Golden 9 Silver 10” Steel prices stabilized and stabilized, or rebounded slightly, but the driving force for continued steel price increases was limited.

This is because the situation of domestic economic growth is not so optimistic. In July, the value-added of industrial enterprises above designated size increased by 9.2% year-on-year, 0.3 percentage points lower than that in June.

From January to July, the national fixed asset investment (excluding rural households) increased by 20.4% year-on-year, the growth rate was flat from January to June; the national real estate development investment increased by 15.4%, and the growth rate fell by 1.2% from January to June. . The PPI (producer's price index) decreased by 2.9% year-on-year and was negative for five consecutive months. These data all reflect that China's economy is still in a downtrend channel. Moreover, some downstream industries will still face the pressure of slower growth and structural adjustment. For instance, orders for the shipbuilding industry, which consume a relatively large amount of heavy plate, have been significantly reduced. Some shipyards even stopped production. According to the statistics of the China Shipbuilding Industry Association, in the first half of the year, the number of ship orders that were cancelled nationwide was 41 and 2.58 million dwt, which was 1.3 times of the total number of withdrawals last year. From January to May, China's shipbuilding volume, orders for new vessels, and orders for hand-held vessels presented a “three consecutive falls”. Among them, the order volume for new ships was 9.54 million dwt, a year-on-year drop of 47.3%. According to reports, a number of shipbuilding companies have declared bankruptcy and 46 companies have stopped working. From this, it is speculated that even in the “Golden 9 Silver 10”, the demand for steel in some industries will hardly increase significantly.

From the perspective of supply, despite the increase in steel mills' efforts to reduce production, the degree to which the supply and demand contradictions in the steel market can be alleviated remains uncertain. From August, many steel mills began to stop maintenance. According to research conducted by some professional organizations, in the near future, 41 blast furnaces have been determined to be shut down or overhauled across the country, affecting 1,057,000 tons of output; overhaul of 27 bar lines has affected 472,500 tons of production; overhaul of 8 hot rolling production lines has affected production. 430,000 tons to 440,000 tons; 3 cold rolling production lines overhauled, affecting output of 50,000 tons; 5 medium plate lines overhauled, affecting output of 170,000 tons to 175,000 tons; 7 strip steel production lines overhauled, affecting output of 85,000 tons ~ 89,000 tons; 2 steel production line maintenance, affecting production 15,000 tons. In addition, according to the statistics of the Steel Association, in July, the average daily output of crude steel was estimated to be 1.6971 million tons, which was 1.99% lower than the actual daily output of 200.71 million tons in June. From this point of view, the steel put into the market later is expected to reduce. However, although the output of large state-owned enterprises is decreasing, the output of some private steel mills is increasing. According to statistics, the output of 33 companies in the member companies of the Steel Association fell by a year-on-year, but the output of non-member companies increased significantly by 12.9%. According to the association’s introduction, in the first half of the year, all new crude steel production was from non-member local SMEs. Therefore, some steel traders believe that there is uncertainty about how much steel production will support the late rebound of steel prices and rebound.

From the inventory situation, at present, the steel market inventory is still high, sales pressure has not been significantly reduced. In late July, the steel stocks of key steel companies were 12.32 million tons, a decrease of 1.04% from the mid-July, and steel mill stocks are still at a relatively high level. In the absence of a significant release of effective demand from downstream terminals, steel mills have had to continue selling at a reduced price to absorb inventory pressures, which to some extent deterred a steady rebound in steel prices in September.

Judging from the trend of futures, the 1301 contract of the main rebar of the last period opened at 3,625 yuan/ton in the morning on the 20th, and then the price showed a downward trend throughout the day, with a minimum of RMB 3,599/ton and a maximum of RMB 3,628/ton. The price closed at RMB 3,607/tonne, which was RMB 25/tonne lower than the settlement price on the 17th; on the 21st morning, it opened lower and lower at RMB 3,597/tonne. Although the stock market rebounded sharply in the afternoon, non-ferrous metal copper emerged in the afternoon and drove up. The city's overall rebound, but the weak fundamentals of the thread, did not follow the overall strength of the market, 3600 area suffered a relatively strong short-press, has not been a complete breakthrough, to close at 3591, compared with yesterday's settlement price fell 21 yuan / ton.

In early August, the industry gross profit touched the production stoppage point, and steel companies began to reduce production, but the effect of reducing production remains to be seen. The market is generally looking forward to the “Jin 9 Silver 10” price market, but the current funding is tight, the downstream demand is weak, and the industry fundamentals are difficult to have substantial short-term It is not realistic to improve in September.