Under The Heavy Pressure Of Policy, The Steel Price Is Returned To Its Original Form, And Downstream Enterprises Are Still Waiting To See

Under the strong pressure from the policy side, commodity prices have experienced a sharp drop in the short term, and the domestic steel prices have all risen since April. In the "buy up do not buy down" steel market, there are more terminal enterprises choose to continue to wait and see, waiting for steel prices to further explore.

Hot steel prices are back to the original shape, but the decline is slowing down

After more than one month's sharp rise, domestic steel prices stand on the historical high. However, since the middle of May for more than ten days, the steel futures have rapidly vomited all the gains since April in a short period of time, with a decrease rate of more than 20%, and was knocked back to its original form.

By the end of May 27, the main contract price of domestic rebar was 4817 yuan / ton, which was equivalent to the price level in early April. Compared with the peak of 6208 yuan / ton in mid May, the price dropped by 22.4%; The price of hot-rolled coil is 5186 yuan / ton, which is similar to the price level in early April and the end of March. Compared with the peak of 6727 yuan / ton in the middle of May, the price of hot-rolled coil decreased by 22.9%.

In terms of iron ore, on May 27, the main contract of domestic iron ore closed at 1046 yuan / ton, and the price returned to the level in mid April, which was about 23% lower than the highest point of 1358 yuan / ton. The Prussian iron ore index also fell to US $191.6/t, down more than US $40 / T from the peak of US $233.1/t on May 12.

However, the sustained sharp decline has shown signs of slowing down. Recently, the domestic steel futures market has been in a zigzag trend of collapse, stabilization, collapse and re stabilization.

On May 24, rebar and hot coil plate fell by more than 3%, and on the 25th, the decline narrowed to 0.69% and 0.56%. Just when the market expected that the decline of steel price might reach the bottom and slow down, on May 26, the futures of rebar and hot rolled coil plate plummeted again by nearly 300 yuan / ton, with the lowest reaching 4661 yuan / ton and 5011 yuan / ton respectively, with the highest drop of more than 6%.

On May 27, the domestic commodity futures market opened, the black series iron ore, rebar, hot rolled coil and so on continued to fall, but gradually turned red. Up to the end of the day, hot rolled coil, rebar, slightly increased, steam coal, iron ore, coke, coking coal and other rose more than 1%.

In the spot market, the prices of rebar, hot-rolled coil and cold-rolled coil in domestic steel market are still falling in recent days, but the single-day drop rate is between dozens and hundreds.

According to the monitoring data of Lange Iron and steel cloud business platform, on May 27, the average price of grade III rebar in ten major cities in China was 4933 yuan per ton, down 52 yuan. Compared with the highest point, the average price of grade III rebar has decreased by about 1300 yuan, with a decrease rate of more than 20%; The price of hot-rolled coil was 5265 yuan per ton, down 64 yuan, with a cumulative decrease of more than 1350 yuan, the same drop of more than 20%.

My analysis of the steel network pointed out that although the current steel prices continue to decline, the profits of steel enterprises have gradually approached or lower than the cost line, leading to the gradual emergence of bottom support, but the overall mood of the market is depressed, and there is no obvious improvement.

Continue to curb unreasonable price rise

Since the beginning of this year, commodity prices have been rising under the comprehensive influence of factors such as the flooding of global liquidity, the mismatch between supply and demand, the expectation of price rise caused by economic recovery, and the expectation of capital speculation and production reduction. For steel enterprises, the prices of iron ore, scrap steel, coke, coal and other raw materials required for steel production are also at a historical high, but the rise in steel prices is higher than that of raw materials. Therefore, the profit per ton of steel of steel enterprises has gradually risen to the historical high in April. There is a large profit space for downstream sales and export, and the steel enterprises are enthusiastic about production.

According to the statistics of China Iron and Steel Association, the revenue of its members' iron and steel enterprises in the first quarter was 154.17 billion yuan, up 52.28% year-on-year; Profits and taxes reached 100.4 billion yuan, up 159.94% year on year; The total profit was 73.4 billion yuan, up 247.44% year on year.

But downstream enterprises are complaining. Real estate, automobile, home appliances, mechanical equipment, shipbuilding and other industries are important downstream industries of steel. The rapid and sharp rise of steel prices directly brings huge impact to the enterprises in the above industries. The profit space is greatly overstocked, the operating costs increase sharply, and finally the contract breaking and bill refund phenomena appear, and the willingness to accept orders is also significantly reduced.

In the face of the rapid rise of steel and iron ore prices, in late April, regulatory authorities began to call for market cooling, but the effect was not ideal.

On April 19, Meng Wei, spokesman of the national development and Reform Commission, said at a regular press conference that the rise in commodity prices was affected by a variety of factors including global economic recovery, short-term adjustment of supply and demand relations, abundant liquidity and investment speculation. There was no overall and trend change in the supply and demand sides of bulk commodities, and their prices did not have the basis for long-term rise.

On April 27, Luo Tiejun, vice president of the China Iron and Steel Association, said that the price of iron ore rose too fast, which was unreasonable, and there was a lot of hype for the expectation; On May 9, the China Steel Association called for curbing the rising trend of iron ore prices, but the rise in steel prices, iron ore and other commodities remained unchanged.

On May 12, the National People's Congress of the people's Republic of China issued a set tone, demanding that the situation at home and abroad and market changes be tracked and analyzed, and the market regulation should be done well to deal with the excessive rise of commodity prices and its associated effects. Since then, on May 19 and May 26, the National People's Congress once again stressed the protection of the supply of bulk commodities, curbed the unreasonable price rise, prevented the transmission to the consumer price of residents, ensured the supply and price stability, and cracked down on hoarding and price hikes.

During this period, the national development and Reform Commission, the Ministry of industry and information technology, and the China Iron and Steel Association continued to speak up, and interviewed key enterprises in iron ore, steel, copper, aluminum and other industries, and strengthened the supervision and investigation of market speculation and price hikes.

On May 24, the China Steel Association issued a document saying that at present, steel production remains at a high level, downstream steel enterprises can not bear the continuous high consolidation of steel prices, and it is difficult for subsequent steel prices to rise substantially. On May 25, LV Guixin, a first-class inspector of the Department of raw materials industry of the Ministry of industry and information technology, said that the sharp rise and fall of steel prices has had a great impact on downstream industries, and steel prices continue to rise, which are not allowed by fundamentals or policies.

Downstream enterprises wait for steel price to plunge

With the sharp callback of steel price, the mood of different links in the whole industrial chain is also quietly reversed.

Guo Xinjie, an analyst of jinlianchuang iron and steel, told reporters of the 21st century economic report that on May 12, the profit per ton of rebar steel of domestic steel mills reached 1137.81 yuan, which fell to 480.08 yuan on May 27, with a drop of 57.8%. The enthusiasm of steel mills for production has also decreased.

Some people from steel enterprises in the industry told reporters that the profit per ton of steel of domestic steel enterprises had been generally higher than 1000 yuan, which was at the highest level in the same period of history; After this round of plummeting, its profit margin has also dropped below 500 yuan / ton, but it is still profitable.

The high price in the early stage led to the decline of steel trading volume in the market. After the price fell, under the influence of the sentiment of "buy up but not buy down", the market volume continued to decline, and the downstream processing enterprises still had strong wait-and-see willingness.

Lange Iron and steel cloud business platform monitoring data show that on May 26, the daily turnover of 10 major building materials companies in Beijing was 5000 tons, with a month on month decrease of about 60% and a year-on-year decrease of about 40%.

According to the survey of my iron and steel network, the steel price has fallen to the psychological price of enterprises. The research enterprises in machinery, household appliances, elevators and other industries are still inclined to increase steel procurement and raw material reserves in June and July.

Some enterprises interviewed believe that steel prices may further decline in June and July, which will be a good opportunity for purchasing and stock up, so as to prevent steel prices from rising again in August and September in the peak season of traditional steel consumption.

For the construction industry, in addition to the rising steel prices, the cost of gravel, earthwork and even construction machinery is rising, and the pressure of capital is growing rapidly. The construction process of projects under construction is still in progress, but some projects scheduled to start this year have been postponed.

A staff member of a state-owned construction enterprise told the reporter of the 21st century economic report that the contract signed between the construction unit and the construction unit is a fixed price contract. If the price of raw materials changes by more than 5%, the price can be supplemented. However, the monthly price increase reaches 20% - 30%, which has exceeded the ability of some enterprises to advance funds.

Zheng Yanchong, general manager of Beijing jujinyang Trading Co., Ltd., which deals in steel trading business, told 21st century economic reporter that although the company signed a fixed profit contract, the sharp rise in steel prices has led to a decrease in downstream purchasing willingness, which is still unfavorable for traders.

In Zheng Yanchong's view, a relatively stable steel price can make the whole industry chain profitable, which is more conducive to the development of the industry.

Market analysts pointed out that at present, the state has successively introduced policies such as reducing steel production capacity and adjusting steel import and export tax rate. After the market digestion for a period of time, the role of easing domestic supply and demand tension will gradually appear.

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