Steel Prices Ushered In Anti-Season Rally

Posted by Ice Li on December 21st, 2016

Winter is the traditional demand off-season for steel. In recent years, the loss of steel trade enterprises winter storage support steel prices tend to go down in the winter, appearing the formation of seasonal low.

Since the beginning of this year, Tangshan Region has been starting from the management of haze to promote the steel industry cut. With the help of environmental protection and legal means to promote steel production, gradually promote the capacity of the way to the country. However, this year's steel industry profits maintain a high level, so the actual steel production has no significant decline. According to the National Bureau of Statistics, by the end of March, the national crude steel production last year decreased by 3.20%. But by the end of October, the national crude steel output was 672.96 million tons with an increase of 0.70% compared with last year.


Into the winter, the steel industry profits have decreased significantly, the proportion of the national profitability steel fell to 47.24%, reaching the lowest level in six months. Iron and steel production enthusiasm went down. At this time, to limit the intermediate frequency furnace, frequency furnace production process as the goal to further promote the capacity measures. According to statistics, the national IF furnace production capacity of about 110 million to 120 million tons, if such capacity out of the steel industry, steel production will effectively decline. Tangshan area where steel production fell about 500,000 tons per month or so.

At the same time, due to cost pressure, steel producers are generally reluctant to stockpile steel inventories in the winter. As of the end of November, the focus of steel stocks 13,167,000 tons of steel, at a four-year low. Out of concern about the price outlook, steel traders are generally reluctant to store library Dongchu. As of early December, the country's five major steel social stock is only 8.6397 million tons which was low in recent years.

Steel demand recovery, real estate investment contributed. The first 10 months of real estate investment has increased by 6.6%. From our research situation, a second-tier cities in real estate business interest is still strong, for the time being has not been affected by the regulation of real estate, next year is expected to peak in the spring construction. Secondly, infrastructure construction in full swing. Development and Reform Commission has approved a number of large projects, do a good job of hedging real estate investment down the preparation. Therefore, even if the demand for steel next year, the real estate decline, the overall demand for steel products may still maintain a balance. And in the first quarter of next year, there will be a peak demand.

This year, coal coke ore raw material prices rose rapidly, but this pushed up the cost of steel production. Tianjin to a quasi-tax price of coke, for example, prices from the beginning of the year 775 yuan/ton up to early December 2325 yuan/ton. Imports of coking coal rose, the domestic port of Australia, the main coking coal prices from the beginning of the 670 yuan/ton rose to the current 1990 yuan/ton. Qingdao Port PB powder prices from the beginning of 322 yuan/ton rose to 640 yuan/ton. Such a huge increase, iron and steel enterprises can not afford, only through the way of gradual price increases to downstream conduction. If the future supply of raw materials will remain high, the price of steel is difficult to have great declines.

Ice Li

About the Author

Ice Li
Joined: November 16th, 2016
Articles Posted: 9

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