The Opportunities and Challenges of China Steel Trade

2012 end of the world, the Mayan prophecy did not come, however, China's iron and steel industry has experienced a year real doomsday baptism; steel demand to drop steel prices continued to drop, monetary tightening, the banks pumping loan, funds flee, economic growth speed dropped, etc, the China Steel industry has been a big shock.

However, the optimism of the Chinese steel enterprises, or believe, after the big impact, Chinese steel trade markets, in 2013, there must be a big opportunity while waiting.

Opportunities one: the economic rebound, increasing government investment, sluggish steel demand will have a larger rebound.

Obviously, the 2013 steel market, given the high expectations, the first face of the domestic economy to pick up, has long been recognized, several consecutive months of manufacturing PMI index showed that China's manufacturing industry began to jump out of the trough, showing a clear active; coupled with the general direction of the countries adhere to expand domestic demand and promote development, it is foreseeable that in 2013 China's domestic consumption will be a further rebound in the auto industry is a very obvious good momentum; manufacturing industry rebound, cold rolled steel and hot rolled steel plate etc, which is demand likely to get a larger increase in the signal; this is a marked change since the fourth quarter of 2012.

Another aspect is the national macro-policy changes, the development of new towns in the direction of "Eighteen" established by the Conference, pointed the way for this year's investment focus; real estate, infrastructure, and other industries will benefit, they will start moving up; Moreover, the attendant equipment manufacturing market will also be a good situation to usher in a significant increase in orders; coupled on the 2012 Development and Reform Commission issued a series of steady growth measures, has begun to specific implementation, some of the utility by the end of the year be verified; the nearly trillion urban rail track construction project since the end of September last year, in the spring of 2013, launched one after another. Rebar, wire rod and other materials of construction steel demand is expected to continue growing.

Opportunities 2: steel trade enterprises left for the king, the short machine to carve up the market share has come.

There is no doubt that the steel industry since the crisis in 2012, so that the closure of many companies, including upstream steel mills, the triage center steel market, of course, is the steel trade enterprises; organization released survey data show that in 2012, around the country, nearly thirty percent of the steel trade and business failures or exit the industry. Dabai shu steel trade market as the country's largest steel trade concentrated in Shanghai, more than 3% of the annual GDP contribution rate in the Shanghai area near depression.

Overall, the 2013 steel prices market will be better than 2012, which is already reached a consensus; analysis, however, the steel trade enterprises in the face of the big opportunities in front of more calm response is required; good macroeconomic policy advantage, also need funding support to the implementation of specific future large investment projects to where to get enough funds, need further observation; another full of instability to the international economic situation, the financial cliff in the United States is only a temporary solution, how to defuse a brief lull greater after the crisis, but wait for the negotiations of the forces of political parties in the United States, the euro zone debt crisis continues to ferment, and unstable factors still exist; let alone domestic steel serious excess capacity, the spot market oversupply the general pattern of signs of improvement yet. So despite the new opportunities are not small, but the potential risk, and therefore need to be cautious.

The Current Economic Status Impacts China Steel Prices

Since the outbreak of the financial crisis in 2008, it continued to spread and deepen. The problem of a country's total steel consumption, it has a continuous. Currently, the global steel overcapacity problem is very serious, and want to excess capacity eliminated the need for many years. Excess capacity is a global problem, and is also an important factor in the steel trade-distorting. For China, could also be too large, steel prices cannot be sustained stabilization and recovery, the growth in demand for steel, even if it is a low-growth may not be able to bring about the growth of the steel, the profits from the products. The confidence comes from the steel consumption, industrialization prior to the completion of at least the next 10 years, should be a growth momentum was maintained, but must be a low-growth.

As the representative of the European and American countries, they are the center of consumption, the center of the capital output operation of so-called reform and innovation go too far, a bubble. Developing countries in the past ten years to become the world's manufacturing center in China, the cost advantage of developing countries to developed countries transport cheap goods, their consumption of transition. We export them out of the problem by the impact of exports and the corresponding affected many areas of production appeared excess. Get a lot of the profits of the assets mainly export-oriented country, by the original export. Brought them? Their own currency appreciation and undermine the international competitiveness of other industries in their own future appreciation when the three issues need to be adjusted, the adjustment process is a fairly lengthy process. China, for example, these years of us rely on the boosting of exports to GDP pulling now export problems, domestic demand needs people continued to increase revenue, improve spending power this form of adjustment is a long.

Steel industrialization support industry, secondary industry in the process of industrialization is the highest, the entire secondary industry in the national economy dominant process is the process of industrialization, industrialized secondary industry what is the construction industry and industrial composition. GDP growth in the process of industrialization first contributor is the second industry, the development of the secondary industry must bring consumption. Is the fastest per capita steel consumption in the industrialization process of the mid-to late industrialization must be from high growth to low growth. To a post-industrial society overall steel consumption will fall from the peak. It will continue to fall after a long time.

For steel situation in 2013, we believe that steel suppliers and production and consumption still have confidence, but we must fully understand that it is a low-growth, because the GDP in 2013 will this year. The tone of monetary easing should also be sustained. Especially a steady growth in new infrastructure projects will encourage investment to stabilize. After about 4-5 trillion out, especially the last two years on infrastructure, investment in fixed assets is highly controversial, but now look at the central government put forward, steady investment is an important measure of steady growth.

Generally speaking, it is a new year for Steel production in 2013, although, we also meet all kinds of problems, the economy of world is becoming better and there will be more good policy for Steel development in China, therefore, as long as we believe, whatever steel products like steel coil, steel pipe, steel sections, angle iron, ERW pipe, Galvanized Steel, etc, the prices will be proper level.

Latest Trends about Steel from China in 2013

From an economic development perspective, the fourth quarter of 2012, China's economy has finally emerged tended to stabilize, but the economic stability of the foundation is not strong, is expected in 2013 or even longer, China's economy will remain stable, compared with the fast development momentum. Expected based on the above, it is expected that the China steel will enter a stage of total consumption of low growth, the domestic steel market in 2013 will show a slight price fluctuations, a stable trend of the overall operation, including iron and steel enterprise meager profit situation is difficult to be effective in improving.

The world economy continued weakness result in international steel prices fall, affecting China's steel imports and exports.

International Steel City, a drop in demand a direct impact on China's steel exports.In 2012, the weak international economy, international steel trade has shrunk dramatically intensified trade protection and trade friction, in October last year, China's exports of billet 5.14 million tons, 1-October total exports of 40.84 million tons. November, December remained practically monthly 400 million -500 million tons of export levels, and this trend continued until at least the middle of next year. This also shows that within the next two years, the balance between supply and demand of China's steel market depends mainly on the domestic market, and look forward to expanding exports to ease the pressure on the domestic market is unrealistic.

On the other hand, from the domestic point of view, the next time there is still a lot of uncertainties, but overall, in terms of domestic demand, the urbanization of the 48 put forward, people's living standards improve requirements from the ability of the consumer spending habits popularity continue to promote home appliances and consumer conditions, the industry's long-term growth space still exist. From the outside, we need to look at the international market environment is relatively stable, the recovery in demand in the United States, Europe stabilized, the Afro-Asian emerging market demand remains strong, the demand on the international market will remain basically the trend this year, is expected to export growth is expected to be flat with last year.

There will be a greater demand from the machinery industry point of view, the special properties of the steel products. The machinery industry demand for steel diversity, both ordinary steel, another high-value-added special steel. Currently, there is part of the special properties of the steel restricting the development of China's machinery industry, the much-needed iron and steel enterprises in research and development of these varieties of steel. Such as electrical equipment industry, some transformer oriented silicon steel, power station boiler heat steel, special steel pipe and other special welding electrodes for steel and other special steel imports; wear plate (thickness required and if the heavy machinery industry from 30mm ~ 120mm), special welding wire, bearing steel, etc.; Another example is General machinery manufacturing, material not only has a certain mechanical strength, but also have some of the resistance to chemical corrosion, wear and other special performance.

Comprehensive analysis, expected in 2013 Chinese steel production and apparent consumption increase, it will not reach a high level, still low growth, is still the total consumption, low-growth stage; 2013 domestic the steel market will show a small price fluctuations, the overall running stable trend, including iron and steel enterprise meager profit situation will improve.