Since the beginning of July, the price of the main contract of Shanghai Steel has dropped by about RMB 500/ton, and it has continuously hit a new low. The market has once again fallen into pessimism. In order to more accurately grasp the industrial chain, we conducted a field survey of the steel market in Hebei Province.
The mine price is lower, the port inventory is difficult to eliminate, and the steel mill generally has low inventory production.
Iron ore prices continue to fall, and the price of imported fine ore in Australia, Brazil and India has reached a new low since 2010. From July to the present, a wave of declines, Brazil's 64.5%, India's 63.5% and Australia's PB61.5% powder ore prices fell 160, 145 and 170 yuan / ton, respectively, a decline of 14.4% - 17.5%. With the decline in steel prices, iron ore iron ore stocks in the later period have led to high port inventories, which have been rampant in 10,000 tons in the past six months. According to Wind data, on August 17, the iron ore inventory of iron ore in China's ports was significantly lower than before. According to the workers of raw materials factory of a large steel enterprise in Hebei, “the iron ore steel enterprises in the former factory faced a severe situation and were generally The operation mode of low raw material inventory is adopted to reduce the operational burden. The steel enterprise stock is 1.5 million tons, and has now been reduced to 500,000 tons." The steel mill reduced its inventory to 98.12 million tons. Affected by this, there is still room for decline in import prices, and the decline in raw material costs has provided the impetus for the fall in steel prices.
Steel mills have greater sales pressure, but no large-scale production cuts
The inventory of deep processing enterprises such as galvanized sheet mills is not small, and steel sales are under tremendous pressure. Steel mills have begun to mobilize employees for sales, and enterprises have entered the era of “national marketingâ€. At present, private steel mills have huge stocks and downstream
Despite the sluggish sales, the steel mills' willingness to cut production is not strong, mainly because the blast furnace shutdown will cause huge economic losses, and the reduction in production means that the company actively reduces market share. The above two factors have led to a high level of steel social stocks. According to my steel network statistics, on August 17, the rebar stocks of major cities nationwide were 6,506,500 tons, an increase of 92,600 tons from the previous week, an increase of 1.44%. Unless there is a large-scale blast furnace's large-scale production cut, it is difficult for steel stocks to fall sharply. The contradiction between supply and demand will remain sharp, and steel prices will hardly improve.
Market transactions are deserted, traders generally "zero inventory"
We visited several large steel markets in Handan and found that the market was generally deserted. Especially since June and July of this year, the business volume has been reduced, and steel traders are also carefully calculating when purchasing goods. “One customer has already made the budget of the steel pipe accurate to the meter. In the past, it was purchased in tons and tons, and it would not care about that point. "Wang, the manager of the Zhizhijiang Logistics Park engaged in steel sales complained. It is understood that there are very few merchants selling goods, usually after receiving orders from the steel mill directly to the customer site to reduce price risk and inventory costs.
According to data released by the National Bureau of Statistics recently, as the most important downstream demand industry for rebar, the demand for rebar in the real estate industry is difficult to strengthen. In July, the domestic steel industry PMI was 44.5%, down 4.7 percentage points from June, and as a leading indicator, the domestic steel industry new order index was only 33.3% in July, down 13 percentage points from June, indicating that August and September. Market demand remains sluggish.
Steel traders report that with the oscillating bottom of steel prices, end users are also provocatively purchasing while watching. However, from the economic data in July, the effect of the previous policies was not obvious. The import and export, industrial added value of above-scale industries, fixed asset investment and the previous PMI all showed that the economic downturn did not end. With the liquidity already so loose, the marginal effects and relaxation of monetary policy are extremely limited. In summary, the current contradiction between supply and demand in the market is still sharp, and the decline in raw material prices may become an unstable factor in the later market. It is expected that the main contract price of 1301 will operate in the range of 3500-3660 yuan/ton.
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