A strong cold air came from north to south, bringing heavy rain in Sichuan, falling snow in Shanxi, and cooling down at a maximum of 10°C. For the steel market, it seems that it has entered the winter ahead of schedule. In only two weeks, Tangshan billet plummeted 260 yuan/ton; Shanghai market rebar and wire rod fell 100 yuan/ton and 60 yuan/ton; rebar futures fell about 200 yuan/ton from the beginning of September. Sudden chilling brought the market confidence to a freezing point, and the market's expectation of Jinjiu was completely frustrated. At present, as a whole, multiple domestic and foreign losses have come at the same time, and the short-term market is hard to come by.
The debt crisis in Europe has been on the rise and emerging market countries have suffered from inflationary pressures. Recently, both European and American countries and emerging market countries are struggling to deal with their own problems. In Europe, the Pandora’s box of European bonds opened again, the ratings of the French Industrial Bank and Agricultural Credit Bank were downgraded, the crisis expanded from the government level to the banking sector; Greece’s finances were out of control, the European debt crisis continued to escalate, and the Eurozone’s high GDP in the second quarter The sharp decline has set the lowest growth rate since the second quarter of 2009. The second bottom of the euro zone economy seems to be only a matter of time.
The emerging markets are generally faced with high inflation pressures. Among the five BRICS countries, India has the largest inflationary pressure. In August, the CPI reached 9.78%, a 13-month high, forcing the government to initiate the 12th round of raising interest rates. On the one hand, Europe and the United States continue to release liquidity to solve their own problems and hit the global market. On the other hand, emerging market countries are not subject to high inflation and cannot afford to loosen their easing. Loose or tight, for emerging market countries such as China, this issue seems to have no perfect answer.
The domestic macroeconomic growth slowed down, and the downstream steel industry was unsatisfactory. Under the influence of the macro tightening policy, the domestic economic growth slowed down, and most of the major downstream of the steel industry still showed a weak trend. Although investment in fixed assets continued to show a steady development, the growth rate of investment in railway transportation dropped sharply and fell 15% year-on-year. In August, the operating rate of affordable housing continued to hit new highs, pulling effect on demand for long products gradually weakened; household appliances went to the countryside. Sales volume both decreased year-on-year and quarter-on-quarter; global newbuilding ship prices and orders fell in August, and China's shipbuilding industry is in a difficult position to change. In all industries, the better is the anti-seasonal rebound of auto production in August, which is also an important support for the rebound of the cold-rolled category. Overall, the recovery of downstream demand was lower than expected.
Demand is weak and supply is high. Supply and demand imbalances continue to plague the market. From January to August this year, domestic crude steel output was 469 million tons, and annual production reached 707 million tons. The steel output increased by 68.48 million tons compared with the same period of last year, of which the largest proportion of rebar and wire rods accounted for nearly 40% of new production. Since the financial crisis, investment has stimulated economic recovery. Construction steel has been stronger than sheet metal for a long time. Market hands have played an important role in resource allocation. Acceleration of long steel production capacity expansion is an inevitable result of steel market development in recent years. This will also make threads The original supply and demand balance of steel and other varieties was broken.
The shortage of funds and the increase in the cost of bulk cargoes have become one of the important factors restricting the steel market. In August, China’s CPI increased by 6.2% year-on-year. Although the chain decreased slightly, it was mainly due to the reduction of the carryover factor. The new price increase factor was still rising, and the domestic inflationary pressure was not reduced. Anti-inflation is the primary objective of the current policy, and the expectation of a moderately loose monetary policy in the second half of the year is expected to fall. At present, the situation of tight funds in the market has become more and more serious. The discount rate of bank acceptance bills in Shanghai has climbed to 11.3 baht/month, compared with only 3.5 baht/month in the same period of last year. Traders' costs for surrogate goods have soared.
The capital is tight and the steel market is in a weak position. Traders can only choose to reduce their inventory. As of September 16th, Mysteel's statistical steel stocks in key cities were 14.25 million tons, which was 240,000 tons lower than the same period of last year. Taking into account the 10.6% year-on-year growth in crude steel production, inventory is clearly mismatched. The weakening of the function of traders as a steel reservoir has amplified the negative impact of weak demand.
Iron ore prices are loosening and cost support is at stake. This year, iron ore has been at a high level of consolidation. 65.3% of India's spot ore prices are basically operating within a narrow range of 175-190. Steel mills suffer from rising iron ore prices and are reluctant to cut their ex-factory prices. This is also an important support factor for steel prices this year. In August-September, there was an anomalous situation in which "the price of steel fell and ore rose". However, the trend of deviation from the end must be restored to the normal range, and the fall in iron ore prices is inevitable. After the Mid-Autumn Festival, prices of domestic ore mines began to fall. The total price of 66% Fe fines in Tangshan has dropped by RMB 90/t. The production cost of the most important factor that has previously supported steel prices has also been loosened, and the downward spiral of steel prices will further open up.
In summary, there are currently more negative factors than bullishness. In the macro environment, the debt crisis in Europe has continued to escalate, and the market’s concern about the bottoming out of the global economy has intensified; the domestic economic growth rate continues to slow and inflationary pressures are still relatively large. It is expected that monetary policy will remain unclear; the demand is mainly steel. The downstream industry is still not optimistic. Downstream demand is harder than expected. In terms of costs, iron ore prices are loosened and cost support is weakened. Based on the above analysis, we believe that the current round of steel price decline is still not over. In the later period, it will continue to be dominated by turbulent downtrend. The iron ore price will continue to fall. The stability of the steel market is expected to wait at least until mid-to-late October.
The debt crisis in Europe has been on the rise and emerging market countries have suffered from inflationary pressures. Recently, both European and American countries and emerging market countries are struggling to deal with their own problems. In Europe, the Pandora’s box of European bonds opened again, the ratings of the French Industrial Bank and Agricultural Credit Bank were downgraded, the crisis expanded from the government level to the banking sector; Greece’s finances were out of control, the European debt crisis continued to escalate, and the Eurozone’s high GDP in the second quarter The sharp decline has set the lowest growth rate since the second quarter of 2009. The second bottom of the euro zone economy seems to be only a matter of time.
The emerging markets are generally faced with high inflation pressures. Among the five BRICS countries, India has the largest inflationary pressure. In August, the CPI reached 9.78%, a 13-month high, forcing the government to initiate the 12th round of raising interest rates. On the one hand, Europe and the United States continue to release liquidity to solve their own problems and hit the global market. On the other hand, emerging market countries are not subject to high inflation and cannot afford to loosen their easing. Loose or tight, for emerging market countries such as China, this issue seems to have no perfect answer.
The domestic macroeconomic growth slowed down, and the downstream steel industry was unsatisfactory. Under the influence of the macro tightening policy, the domestic economic growth slowed down, and most of the major downstream of the steel industry still showed a weak trend. Although investment in fixed assets continued to show a steady development, the growth rate of investment in railway transportation dropped sharply and fell 15% year-on-year. In August, the operating rate of affordable housing continued to hit new highs, pulling effect on demand for long products gradually weakened; household appliances went to the countryside. Sales volume both decreased year-on-year and quarter-on-quarter; global newbuilding ship prices and orders fell in August, and China's shipbuilding industry is in a difficult position to change. In all industries, the better is the anti-seasonal rebound of auto production in August, which is also an important support for the rebound of the cold-rolled category. Overall, the recovery of downstream demand was lower than expected.
Demand is weak and supply is high. Supply and demand imbalances continue to plague the market. From January to August this year, domestic crude steel output was 469 million tons, and annual production reached 707 million tons. The steel output increased by 68.48 million tons compared with the same period of last year, of which the largest proportion of rebar and wire rods accounted for nearly 40% of new production. Since the financial crisis, investment has stimulated economic recovery. Construction steel has been stronger than sheet metal for a long time. Market hands have played an important role in resource allocation. Acceleration of long steel production capacity expansion is an inevitable result of steel market development in recent years. This will also make threads The original supply and demand balance of steel and other varieties was broken.
The shortage of funds and the increase in the cost of bulk cargoes have become one of the important factors restricting the steel market. In August, China’s CPI increased by 6.2% year-on-year. Although the chain decreased slightly, it was mainly due to the reduction of the carryover factor. The new price increase factor was still rising, and the domestic inflationary pressure was not reduced. Anti-inflation is the primary objective of the current policy, and the expectation of a moderately loose monetary policy in the second half of the year is expected to fall. At present, the situation of tight funds in the market has become more and more serious. The discount rate of bank acceptance bills in Shanghai has climbed to 11.3 baht/month, compared with only 3.5 baht/month in the same period of last year. Traders' costs for surrogate goods have soared.
The capital is tight and the steel market is in a weak position. Traders can only choose to reduce their inventory. As of September 16th, Mysteel's statistical steel stocks in key cities were 14.25 million tons, which was 240,000 tons lower than the same period of last year. Taking into account the 10.6% year-on-year growth in crude steel production, inventory is clearly mismatched. The weakening of the function of traders as a steel reservoir has amplified the negative impact of weak demand.
Iron ore prices are loosening and cost support is at stake. This year, iron ore has been at a high level of consolidation. 65.3% of India's spot ore prices are basically operating within a narrow range of 175-190. Steel mills suffer from rising iron ore prices and are reluctant to cut their ex-factory prices. This is also an important support factor for steel prices this year. In August-September, there was an anomalous situation in which "the price of steel fell and ore rose". However, the trend of deviation from the end must be restored to the normal range, and the fall in iron ore prices is inevitable. After the Mid-Autumn Festival, prices of domestic ore mines began to fall. The total price of 66% Fe fines in Tangshan has dropped by RMB 90/t. The production cost of the most important factor that has previously supported steel prices has also been loosened, and the downward spiral of steel prices will further open up.
In summary, there are currently more negative factors than bullishness. In the macro environment, the debt crisis in Europe has continued to escalate, and the market’s concern about the bottoming out of the global economy has intensified; the domestic economic growth rate continues to slow and inflationary pressures are still relatively large. It is expected that monetary policy will remain unclear; the demand is mainly steel. The downstream industry is still not optimistic. Downstream demand is harder than expected. In terms of costs, iron ore prices are loosened and cost support is weakened. Based on the above analysis, we believe that the current round of steel price decline is still not over. In the later period, it will continue to be dominated by turbulent downtrend. The iron ore price will continue to fall. The stability of the steel market is expected to wait at least until mid-to-late October.
Bao Ding Tian Wei Group Transformer Co., Ltd. , http://www.jspowertransformer.com