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Steel prices continue to rise or contain risks

Date:2008-06-15 00:00:00

Steel prices increase or contain risks

    In the past week, the prices of major domestic steel products have generally risen. This is the fourth consecutive week of rising steel prices. However, market participants believe that the momentum of the continuous rise in steel prices has created a great “contrast” with the current situation of excess total steel output and a sharp drop in exports, which may contain risks.

     According to monitoring, in the past week, the specific market trend of domestic major steel products is: construction steel prices rose sharply, including Guangzhou, Jinan, Beijing, Tianjin, The tonnage price in Shenyang and other cities increased by more than 100 yuan; the plate price rose sharply, and the ton price in Guangzhou, Taiyuan, Beijing, Tianjin, Shenyang and other markets rose by an average of 100 yuan or more; the price of hot and cold coils was slightly increased, and the market in Shanghai was thicker. The price of hot-rolled products is about 3,400 yuan. The prices of large and medium-sized steel products have risen steadily.

    According to analysis, in the construction of steel products, the tonnage of major specifications products in Shanghai, Hangzhou and other markets rose by 120 to 150 yuan in one week, and a slight correction of 30 yuan in the weekend; Markets such as Beijing, Tianjin, Shenyang and Lanzhou rose even more, reaching around 150 to 200 yuan per ton. Within a week, a total of 56 rebar producers and 40 wire manufacturers adjusted the ex-factory prices in the country, and the increase is still the mainstream. At present, there is a strong demand for construction steel products in various municipal projects. The market sales volume has been further enlarged from the previous period, and certain specifications of products have experienced a certain degree of supply shortage in some cities. It is estimated that the market price of construction steel in the next step will generally have room to rise, but the increase is very limited.

    The prices of plate prices have risen sharply. The tonnage of medium-to-thick plate in the Shanghai market has fallen from 3200 to 3280 yuan for 6 weeks. This week's upward adjustment has broken through 3300. Yuan, the momentum has been basically established in the short term. At present, the plate price is the lowest among all major steel products. The operating rate of plate mills is also low. It is estimated that the next plate market will continue to face a slight increase, but it is difficult to make major breakthroughs. The prices of hot and cold coils rose overall, but the increase was smaller than that of construction steel and plate. It is estimated that the domestic market for hot and cold rolled products will continue to be in a weak state.

    The continuous upward trend of domestic steel prices has already formed a clear "contrast" with excess output of steel and a sharp drop in exports. According to data released by the Customs, China's export steel products fell by more than 70% year-on-year in April this year, a new monthly low since November 2005, which is also the monthly export of Chinese steel products for less than 2 million tons for four consecutive months. The Ministry of Industry and Information Technology has also issued an urgent circular recently, requesting localities to curb the momentum of excessive growth in the iron and steel industry. Steel companies that blindly expand their production in spite of market demand must ask local commercial banks to reduce or stop loans.

    Industry believes that under this background, the continuous rise of steel prices may not be a good thing. “After the continuous rise in steel prices, many steel mills think that they are profitable and increase steel production significantly. When steel prices lack upward momentum, these output increases will aggravate the market supply and demand contradictions and lead to a drop in steel prices again. P>

    In the industry, it is generally believed that the rise of steel prices cannot continue. This year steel prices will continue to fluctuate at low levels.

    "The current steel price rise is subject to specific support conditions. This is doomed to be a short-term recovery. After all, the overall overcapacity is serious and the inventory is still at a high level, which will lead to steel prices Adjusted for low volatility.” Industry experts said that at present, domestic demand is very much dependent on national investment, the overall demand for steel is weak, and the rise in steel prices cannot be sustained.

    Xu Lejiang, chairman of Baosteel Group, expressed his optimism about the short-term recovery of the steel industry at the “2009 Lujiazui Forum” held at the weekend and said that the industry-wide losses will at least Continue until the end of the year. Xu Lejiang believes that China's steel mills are not as productive as foreign steel mills, 70%-80% of production capacity is still in production, coupled with higher domestic steel prices than foreign countries, foreign steel products are also flooding into the domestic, domestic steel companies. Not too good.

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