Steel Market Will Show "Low Supply And Demand" Pattern.

At the end of 2009, "steel city Salon", which was attended by more than 40 steel production and circulation enterprises in Baosteel, Shanghai, the participants said that the supply and demand relationship of the domestic steel market in 2009 will maintain "low supply and low demand" trend. It is expected that the price of domestic steel market will be at a low price level in 2009, with low price shocks in the first quarter and a resumption in the two quarter.

　　 Supply and demand depend on capacity release and export.

Liu Wenlu, the organizer of the conference, said that in 2009, the construction steel will generally be "low supply and low demand", and will adjust itself with the fluctuation of the market price. The supply and demand relationship of domestic steel market depends on the release of new capacity and the degree of export recovery.

Analysts have once thought that the current steel market is divided by varieties, and there are obvious overcapacity and price upside down. The steel enterprises are forced to no longer simply pursue the board to tube ratio. Some large steel mills that originally only produce high-end products are also added to the field of building materials production. They hope to avoid losses and profits reduction of the coil products through product transformation. It can be predicted that investment in the future plate will be reduced, and the production capacity of plates will be restricted. The investment in long timber will increase and the utilization of capacity will increase correspondingly.

Liu Wenlu predicted that China's crude steel output in 2009 will be between 5.2 and 5.3 billion tons, an increase of 2000 to 30 million tons compared with the 4.97 million tons in 2008, an increase of 4.5% to 6.5% over the same period last year.

　　 Steel prices are not optimistic in the short term.

Recently, big steel companies such as Baosteel and Anshan Iron and steel company raised the price of steel in February 2009 to boost the recovery of market confidence, and some small and medium-sized iron and steel enterprises in North China began to resume production. However, Liu Wenlu believes that the capacity increase of large and medium-sized enterprises is not optimistic. The high price of iron ore and the low price of steel are still the main obstacles to the recovery of large and medium-sized steel enterprises.

Liu Wenlu said that in October 2008 and November, the price of imported iron ore has dropped from the 3 quarter, but it is still higher than the domestic ore price of nearly 200 yuan / ton. More importantly, the price of spot iron ore from India has dropped to $80 / ton in November, while the price of iron ore in the Brazil import agreement remains at 150 US dollars / ton. The cost of small and medium-sized enterprises mainly purchased by domestic procurement and spot purchase has dropped significantly, while the large and medium-sized enterprises that use long coal mining association still face the high cost problem.

"Although the price of imported long association minerals is expected to drop by 20% or more in 2009, the spot trade of iron ore will gradually become the mainstream, and the cost advantage of large and medium-sized iron and steel enterprises will be significantly weakened, and the market competition will become more intense."

The main reason for the recent rise in steel prices is that there is no inventory in the hands of steel mills and dealers. The demand for a customer's orders may be magnified ten times, and there will be another cycle of increase in supply, and prices will naturally rise. But now manufacturers have enough raw materials and businesses have lots of steel on their way, so it is estimated that steel prices will drop after the Spring Festival.

As for exports, market participants are not optimistic. Liu Yuan, an analyst, believes that in addition to unfavorable reasons such as exchange rate and trade protection, China may become one of the few countries with relatively strong steel demand in 2009, thus reducing the gap between domestic price and international price and even higher than that of the international market.

Editor: vivi