Several uncertainties in the future of the steel industry

Abstract Under the support of the favorable policies in the early stage, the market has been full of expectations for the market of Jinjiuyin. However, there are still many uncertain factors in the operation of the market. These factors may directly affect the trend of steel prices in the later period, which must be concerned by all relevant parties in the market. &nb
Under the support of the favorable policies of the previous period, the market has been full of expectations for the market of Jin Jiu Yin Shi. However, there are still many uncertain factors in the operation of the market. These factors may directly affect the trend of steel prices in the later period, which must be concerned by all relevant parties in the market.


First, in the first half of July to the first half of August, after the steel market ushered in a wave of rally, the profitability of some steel products improved, which stimulated the production enthusiasm of the steel mills, and the production pace was significantly accelerated. According to the statistics of the Steel Association, the average daily output of crude steel in mid-August is higher than that in July. It is expected that the monthly output in August will increase further than that in July. This means that the amount of resources put on the market will increase, and the contradiction between supply and demand, which has just eased slightly in the previous period, is likely to deteriorate further.

Second, along with the continued rise in steel prices in the previous round, raw material prices also quickly detected. Especially for imported iron ore, the price increase is much larger than the increase in steel prices. In the second half of August, after the steel price was adjusted back, the price of imported ore was stable at the previous high level. According to statistics, as of the end of August, the price of Newman's fine ore in Qingdao Port's 62.5% grade increased by RMB 50/ton compared with the beginning of August, an increase of 5.61%, which was 11.9% higher than that at the end of June. After the steel price has been adjusted for nearly half a month, as of the end of August, the price of Grade III rebar was only 1.96% higher than that at the beginning of August, and the increase of 4.75mm hot rolled coil was only 1.79%, much lower than that of imports. The increase in the price of the mine.

In addition, although the rally is not particularly obvious, domestic mines and coal prices have also rebounded. In August, the price of coke market rebounded from 30 yuan/ton to 80 yuan/ton. Moreover, it is understood that Shanxi, Shaanxi, Inner Mongolia and other major coal provinces are preparing to issue coal support policies. In response to the decline in the coke market, coke prices may gain further momentum.

In the case of a significant increase in production costs, the profit margins of steel companies are bound to be squeezed.

Secondly, we do not deny that the downstream demand situation may be further improved, driven by steady growth and favorable policies. But even so, the release process of terminal demand is still affected by many factors. For example, the scale of funds required for railways, urban rail transit construction, and shantytown renovation projects will be large, and it will take some time to raise funds. This will inevitably affect the start-up and construction of the project; the new energy efficiency standards for the home appliance industry will begin to be implemented in October. The industry believes that in the short term will promote the adjustment of the production line of the home appliance industry, and so on. In this case, the release of steel demand in the downstream industry will be a slow and long-term process.

In addition, the third quarter should also pay close attention to the status of the capital of steel companies.

In short, the supply and demand situation in the steel market is changing rapidly. If the steel mills cannot control the production rhythm, and the production will increase, and the pace of demand release will be delayed, the contradiction between supply and demand in the steel market will rapidly intensify, causing the steel market to turmoil. It is recommended that steel mills must strictly implement the principles of controlling production and adjusting structure, rationally grasp the demand situation, and jointly maintain the healthy and orderly market.

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