News
We have professional sales team numbered 200 with more than 16 years experience.
Position:
Home > News > Company news

Steel price went down sharply and entered the winter in advance

2019-10-16 18:19:49
As the traditional steel consumption peak season, the steel market price in October went down all the way, exceeding the expectations of many people. Taking rebar as an example, as of October 20, the mainstream price of national grade III rebar was 3,600 yuan / ton to 3,630 yuan / ton, compared with 3,710 yuan / ton on October 1, the decline was 80 yuan / ton ~ 110 yuan / ton, basically the September steel price rebound "return" to get rid of.
The steel market performance in October was sluggish, and the release of demand was less than expected may be the root cause.
This situation can be summarized as follows: infrastructure investment is difficult to grow, manufacturing investment is declining, and real estate maintains the status quo. These areas are the main contributors to steel demand. This situation has also led to the release of steel demand in the peak season this year is less than expected, and it is reasonable for steel prices to fall due to the lack of demand.
As the weather turned cold in the later period, the construction sites across the country gradually entered the shutdown state from north to south, and the steel market demand is expected to continue to decrease. If there is no major positive, it is not ruled out that the steel market has the possibility of "entering the winter" ahead of schedule.
At this stage, the steel market will re-enter the downward adjustment cycle. There are several reasons for this:
First, the heating season is coming soon. In order to solve the problem of smog surrounding the city, the steel industry will re-launch the production limit alarm. Take Tangshan Mountain in Hebei Province as an example. The time limit for control is from 0:00 on October 10 to 24:00 on October 31. This will impose certain restrictions on market resource allocation. However, the Ministry of Ecology and Environment has already made it clear that the winter heating season is strictly prohibited for “one size fits all”. Therefore, the restraining effect of the production restriction policy on the release of steel production capacity remains to be seen.
Second, the “super-storm” has resumed, and steel transportation costs have risen in large areas. After the bridge rollover accident occurred in Wuxi, Jiangsu Province, Zhejiang, Hunan, Anhui, Henan, Guangdong, Hainan, Fujian and other provinces have successively launched “governing over-limitation actions”, which has led to a sharp increase in steel freight rates. In order to pass on the cost pressure, traders will naturally increase the price of steel, which will have a certain inhibitory effect on the downward price of steel. In addition, the “super-storm” will also restrict steel transportation to a certain extent, which will adversely affect market transactions. It is difficult to say whether it can form a hard support for steel price rebound.
Third, the current market sentiment has turned into pessimism, and the ex-factory price of steel has been lowered. With the spread of pessimism, it is expected that steel prices will hardly rebound in the short term.
Fourth, the cost side of current steel prices is also loose. At present, the prices of raw materials such as coking coal, coke and iron ore are weak. In particular, with the increase in production in the steel industry in the fourth quarter, the demand for iron ore slowed down. After a sharp rebound in the previous period, it is expected that iron ore prices will return to the downtrend channel in the later period. For the steel market, this means that the overall cost of steel will move downwards, which will have a certain downward drag on the price of steel in the later period.
Based on the above analysis, after a brief rebound in September, the steel market will re-enter the downward adjustment cycle. On the whole, the current market has gradually shifted from the peak season of steel consumption to the off-season, and the market lacks effective rebound power support.
Of course, after entering the fourth quarter, in order to stabilize the economic growth, it is not excluded to introduce relevant stable growth policies, which may form a certain repair to the market pessimism. However, from a holistic perspective, the trend of steel prices in the market is more dependent on the game of supply and demand. In the case of continued shrinking demand, prices are unlikely to rise sharply, and more will continue to oscillate and adjust the market.