China Steel Prices After Chinese New Year

Just the end of the Spring Festival, many steel trading business have started to the new year's work, more and more people are open for business, and steel prices rebound. Overall, however, the prices of finished steel were now significantly rise, including sheet metal products gains stronger than construction steel.

Monitoring shows that, the domestic key cities Ф25mm three rebar average price of 3925 yuan (t price, the same below), up 46 yuan from preganglionic; the domestic key cities Ф6.5mm high line an average price of 3,770 yuan before the holiday up 41yuan; domestic major cities 5.5mm hot rolled coil average price of 4,212 yuan, up 51 ​​yuan from preganglionic; 1.0mm cold plate of the domestic focus of the central city average price of 4,906 yuan, up 49 yuan before the holiday; domestic major cities 20mmthe board average price of 4054 yuan, up 67 yuan higher than before the holiday.

We know, from entering since 2013, many macroeconomic data show that the economy is slowly recovering. January export growth hit a 21 month high, PPI chain liters by the down turn, influenced by the Spring Festival Golden Week, the rapid growth in consumer. The market is generally believed that the economic rebound is expected to enhance the future economic growth will continue to rebound.CPI data, although affected by seasonal factors, the January CPI as expected to fall, but the view from the the Recent market participants forecast the February CPI data, the possibility of warming is still very large.

During the Spring Festival, the businesses in the market outlook is expected to better steel prices increased significantly, while around the arrival and more, so the obvious rise in the stock, recently merchant sales pressure is revealed. Inventory, as of last week, the 35 major markets nationwide rebar inventory was 8.4544 million tons, an increase of 930,800 tons; the wire stock 2,322,300 tons, an increase of 445,700 tons. From national wire rod, rebar, steel coil (hot rolled coil, cold rolled coils), the inventory total view of the plate, etc., a comprehensive national inventory total of 18,117,700 tons, an increase of 1.85 million tons, an increase of 11.37%.

At the same time, the postganglionic all varieties inventory increased in volume.According to the inventory statistics show that, as of February 19, 2013, the social inventory of the nation's major markets five varieties of steel was 18.016 million tons, an increase of 1.851 million tons compared with before the Spring Festival, rising for nine weeks in a row.The downstream construction as well as machining timber procurement earliest have to wait until the Lantern Festival after recovery, the steel market in the short-term need to guard against the risk of a sudden drop in steel prices.

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.

Steel Storage Plan in Winter

The last month of 2012 is gradually drawing to a close, in the first three quarters of this year, steel prices all the way down to the steel trading business has lost confidence in the market, and even started to give up to save the steel tradition to continue for many years in the winter. However, yesterday's institutions in the industry predict that steel prices next year may per ton rose a few hundred dollars, to 4000 yuan. This can also be considered to be the most optimistic projections of future steel prices. Coupled with the recent steel prices have an upward trend, many Chinese steel traders and renewed enthusiasm.

The steel market in December, giving the feeling of a deviant help, absolutely no traces of common sense out the card, steel prices in the 12 in the coldest month of the year is enthusiasm, macroeconomic policies favorable raw materials market rally supportand peripheral capital markets drive up the various factors such as the impact of steel prices have a relatively objective of growth, but the volume has not been a corresponding increase analysis worried about weak demand in the terminal, the rise of steel prices depend on external influences,with no stability.

But towards the end, continue the favorable policies of steel industry, the steel prices showed signs of warming. Development Research Center of the State Council, Industry Vice Minister Yang Jianlong, 2013, in the Chinese economy run steady trend on the rise, real estate, automotive, infrastructure, electricity and investment will increase.Meanwhile, the export situation will be improved, the new orders index, new export orders index, purchasing volume index continued to rise, the basic consumption of steel inventories reflect the company's activities end.For this, the steel industry has been the basic realization of the process of bottoming out, and 2013 is expected gradual recovery.

The sheet market, the price of the first two ten-day month is mainly a rebound, but in the late early and long products began to enter the shock consolidation period; sheet market hot-rolled, galvanized steel sheet and plate or, rose more than 120 tons, its reasons in addition affected by the favorable impact of the industrial economy continued to pick up, pick-up in manufacturing industry boom driven by the related demand for steel, smooth release of the main factors, plus sheet stock has been in a low, so that inthis winter has characteristics significantly difficult or easy to rise.

Analysts say， the next spring steel prices will certainly rise, so as long as there is a steel trading business should not only make steel storage ，and stocking should as much as possible. However, there are a lot of people think that this does not work, because of the problems of many steel companies have capital chain tension, will bring a lot of risk if a large number of steel storage，therefore， for steel-commerce providers， they should be careful for steel storage in winter.

Steel market situation in China

Recently, the domestic steel spot market to pick up slightly, but the demand side is still a lack of strong support. The performance impact of each macro side fundamentals, China steel prices will be back shock pattern.

According to the monitoring, the domestic spot steel prices being "first growth and stable". Last week, affected by the good news of the macro side, the steel market confidence has been boosted, and steel prices generally rose slightly. However, due to the deep-rooted Steel City "off-season" effect, rising steel prices and lack of demand for support, the price of steel products stabilized again.

According to the analysis, in the sheet market, the overall situation is a sign of strength, reversing a previous downward trend, however, the Wuhan individual market is still slightly dropped. The market analysts believe that the macro data show that the economy has been warmer, the capital market is also strong, which boosted the confidence of the steel market. Steel plate prices with the potential to rise, but "high" shipments rose difficult. The weather is getting cold, the downstream steel enterprises procurement reduce the total demand is weak, or the more obvious. Also the consolidation of hot rolled coil prices stabilized, the dominant trend of the market has been divided, the Shanghai market is basically stable, Tianjin, Beijing and other manifestations of decline. Even up areas, the businessmen's willingness to raise steel prices are still relatively low. At a time when the year-end season, merchants repayment pressure greater surface tension of funds, large-scale "stockpile" phenomenon is unlikely to occur.

In the construction steel market, overall prices were slightly up. However, with the northern part of the region once again snowfall, the downstream demand is further suppressed, the turnover of the steel will be blocked. Think some steel trading business, taking into account the prices of raw materials such as iron ore, steel billets is still strong, the other specifications of the individual market segments less resources, and the bottom of the construction steel market there is still some support for limited downside, in short term, steel prices are still vulnerable fluctuations.

Relevant agencies said that some downstream industries of steel began to exhibit varying degrees of signs of warming, which is more or less conducive to the increase in demand for steel. But it must be remembered, steel prices have been more than a year of decline, businesses lingering fear, more cautious mentality, plus funds face superimposed adjustment factors, the China steel will continue to maintain a weak state.

About Chinese steel industry profits

According to the latest statistics released by the General Administration of Customs, Chinese iron ore imports in November to 65.78 million tons, an increase of 9.35 million tons last month, setting a new high for the year. The face of the dependence of imported iron ore up to 60% of the current situation, "going out" of Chinese steel is becoming increasingly important to develop overseas mining rights. Before the National Development and Reform Commission, the Foreign Investment Department, Deputy Director Wang Jianjun said publicly that will increase policy support and development of enterprises' overseas iron ore development efforts.

Analysts said, In recent years, China's iron and steel industry has entered a period of steady development, the decline in iron ore demand growth, coupled with the rapid growth of the domestic ore imported ore alternative, since 2009 China's ironore imports growth is slowing down, prompting our dependence on imported ore to 60%, but still did not get rid of the fact that this long-standing dependence on imported.

Analysis. The data show that three quarters of the iron and steel industry profits down 84.1%, a decline from the previous quarter expanded 46.8 percent.The response in the industry is mainly concentrated in three areas. First, adjust the structure of the iron ore imports to ease reliance on the traditional three miners. On the other hand, the steel industry from top to bottom all want to compete for iron ore pricing right, the beginning of this year, China launched the iron ore spot trading platform, the iron ore futures are also in the pipeline.

Therefore, in accordance with the current situation, in the last month of 2012, the import and export of all kinds of steel will basically remain stable, such as stainless steel, galvanized steel and galvalume steel production and sales will not be too large fluctuations.

The data show that imported ore, less than 10% of China's mining interests. Steel Association had raised the target, the supply capacity of iron ore concentrate production for 2015 will be the total demand of less than 40% to about 45%; imported overseas iron ore concentrate, China's mining interests in imports the proportion of the total amount will be increased to 50% or more.

So, overall, the development of China's iron and steel space is still very large, especially in overseas expansion, of course, the domestic policy factors also affect the profits of China's steel, and is a critical factor. Because China steel prices advantage in international competition no longer has a dominant position, so only the continuous improvement of technology to improve the technological content of the iron and steel industry and steel, in order to gain advantage in the fierce competition in the status.