Steel structure engineering company tells you why China's steel prices are rising again?

Recently, the price of steel structure is constantly rising, but why the price of steel structure once rose is a problem. The following will take you to understand why the price of steel structure has risen again. There are two main points:

1. Steel mill inventories have plummeted, and market resources have shown a rare convex tightening situation in recent years

According to friends from Hebei, due to the holding of the Tangshan World Expo Park, China's largest steel production capacity base, a large number of steel mills have stopped production and reduced production; Steel mill inventories and market inventories have fallen far faster than the rest of the country, which has led to a hot situation in billet trading and rush buying in the region that has rarely been seen in recent years. It is rumored that the existing steel mill billet orders in Tangshan have been signed in May, and the tight billet resources will continue within a certain period of time.

At the same time, large manufacturers of building materials such as Tanggang and Jiujiang have also greatly reduced the production capacity of building materials, and some have switched to other products. With the arrival of the peak demand season of the construction steel market, the inventory in the hands of traders is mainly strips and profiles, and the building materials are relatively small. When communicating with customers in the southern region, it was learned that the current steel mills in Jiangsu, Zhejiang and Shanghai regions, the inventory of building materials has also fallen to the lowest point in recent years.

Shandong market construction steel production and demand are in the domestic prominence position, the current mainstream steel mill inventory has fallen to the beginning of March less than half, at the same time, there have been two steel mills in Shandong has a certain influence, due to various reasons, has been in a state of suspension or semi-suspension of production, daily impact on the output of not less than seven or eight thousand tons. Now the inventory of construction steel in Shandong steel mills has also fallen to the lowest point this year, this phenomenon is not only building materials, such as billet, molten iron, etc. In addition, it is understood that at present, many steel mills in Hebei, Shandong, or Jiangsu and Zhejiang are facing the problem of having orders but not delivering on time.

2. Construction projects and construction sites are started, and market demand is fully increased

As we all know, the construction site is really fully started, after the middle of March every year (referring to the north), from April, the market demand for construction steel will be fully released. With the rapid increase in steel demand, coupled with the lack of resources, the price naturally rises, which is reasonable. In fact, when the steel mills introduced the price policy in the first half of April on April 1, the price has been followed up and raised simultaneously, and a positive signal has been released to support the price of building materials in April.

These are the two main points that the author continued to be optimistic about the market trend in April when talking about the market with friends during the holiday. Of course, in the actual operation of the market, it is not ruled out that there will be certain fluctuations, but the general direction is still positive and optimistic. As the author, I can also be regarded as a person who has several years of experience in the steel trade circle, but this year's round of strong market is the first time I have encountered it. Therefore, I hope that peers will carefully observe the market, seize this rare opportunity, make more money, and make progress every day.

In March, the price

trend of the steel market surprised most people, and the spot price soared, fell, and then rose, and market confidence was boosted. The author's analysis believes that the steel market price rose sharply in March, and the relationship between supply and demand is the most important factor. As we all know, in the context of long-term losses, the domestic steel supply has declined significantly, in January ~ February 2016, the average daily crude steel production in China was only 2.0178 million tons, a year-on-year decrease of 8.8%, down 2.8% from December 2015.

From the demand side, since March, domestic steel consumption has risen significantly, as of the end of March, the inventory of the five major domestic steel varieties (rebar, wire rod, hot-rolled coil, medium-thick plate, cold-rolled coil) totaled 11.08 million tons, down 12.25% month-on-month. Considering that it takes time for steel production to be shipped to various markets, coupled with the slow increase in steel production, there was an obvious supply shortage in the domestic steel market in March, which became an important support for the rise in steel prices. In addition, the sharp rise in futures market prices and the soaring price of Tangshan billet also contributed to the rise in steel prices.

After the sharp rise in steel prices, due to the low acceptance of the downstream, a large number of merchants hope to cash out and profit, and the spot price has dropped significantly, and the price of some varieties fell by 200 yuan / ton ~ 300 yuan / ton within a week. After the price became rational, the downstream demand gradually increased, and the spot price stabilized and rebounded, among which, the price of cold products (cold-rolled coil, galvanized, color coating) reached a new high; However, the prices of hot products (rebar, hot-rolled coil, medium and thick plate, section steel) are lower than the previous high, basically about 100 yuan / ton lower than the previous high.

In view of the steel price trend in April, the author believes that spot prices will remain high, but it is difficult for thermal product prices to break through the previous high. First of all, the increase in domestic steel supply is not obvious, and the resumption of blast furnace production is not as expected. Secondly, downstream demand in April is expected to maintain the level of March, the new construction area of real estate increased year-on-year, and more infrastructure investment effectively boosted steel consumption. The manufacturing PMI reached 50.2% in March, returning to the expansion range, which also indicates that the downstream demand for steel is good. Secondly, the steel enterprises that have stopped production generally lack money, require a lot of funds to resume production, and the confidence of enterprises to resume production is insufficient; In addition, due to the influence of the Tangshan World Horticultural Expo in North China, it is difficult for the blast furnace yield to increase significantly. Therefore, the supply pressure of the domestic steel market in April will not be great, and the social inventory is at a relatively low level, so the steel market price support is strong.

However, there is also pressure on steel prices to break through the previous highs. First, the downstream demand for cold products is difficult to maintain a good level, automobiles, home appliances sales data has shown weakness, although the leading steel companies in April to receive orders are better, but after May the pressure of orders. Second, at present, the order acceptance of cold products of enterprises is not ideal, so the downstream demand of this part is suppressed in the later stage. Third, the rapid decline in the early stage of steel market prices has made market merchants palpitate, and the price of steel market in the later stage will tend to be ideal, and how to successfully cash in profits has become the primary concern of merchants. Fourth, after the rapid rise in domestic steel prices, a large number of export orders were broken, and the pressure on domestic steel supply increased in disguise. Fifth, the weakening of raw material prices is not conducive to the continuous rise in steel prices.

In terms of the balance between supply and demand, in the first quarter, domestic steel downstream consumption shrank by about 6% year-on-year. It is speculated that the current average daily supply of crude steel is close to 2.2 million tons is still a high level, even if intermediate dealers have the need to replenish inventory, and the domestic crude steel supply increase in April is difficult to climb, the market will not be in short supply.

All in all, the author believes that the domestic steel market price in

April will maintain a high level of consolidation, at the beginning of the month in many steel mills factory price increase stimulus, spot prices are expected to rise, but with the release of supply increment, domestic steel prices may appear to fall back risk, April domestic steel average price will be higher than March. It is recommended to focus on the situation of 1605 contract futures forced positions, and the changes in crude steel production also need to be paid close attention. In the medium and long term, domestic steel production profits are high, steel mill production enthusiasm helps to maintain a high level of output, and downstream demand will be difficult to match, coupled with iron ore prices there is a risk of pressure downward, domestic steel market prices will gradually weaken.

Do you understand the above introduction to the reasons for the price increase in the steel structure market? If you want to know more, you can directly click the upper right corner online consultation and get in touch with Xirong steel structure.