When will the bottom of steel prices continue to appear?

From June onwards, it was the off-season of steel consumption, coupled with the bank’s continued liberation from steel trade and even steel production companies. It was difficult for large steel companies to bear the current financial pressure. Ordering, taking Baosteel as an example, the steel price has been lowered for three consecutive months, making market expectations even more pessimistic. Under such unfavorable circumstances, although steel mills are currently forced to collectively limit production insured prices, from the actual reduction in production, there are Cuts in production, but the amount of reduction is insignificant. The cut-off of blast furnaces in August did increase. However, the decline in average daily output is only equivalent to a total reduction of more than 500,000 tons. The contradiction of oversupply is still very acute. Under such circumstances, the downstream purchase demand has always maintained the low purchasing demand due to concerns about the continued decline in steel prices. The market has always been the trend of "warm boiled frogs". Market expectations and actual repeated effects affect each other. The current steel market and stock market are really affected. The same, the weak market does not make sense. Following the author's latest changes in the current market, for some key issues for everyone to make some simple analysis and prediction.

Does collective reduction of production capacity stimulate steel prices to turn upwards?

Recently, the China Iron and Steel Industry Association convened a number of large steel plants such as Shougang, Taigang and Anshan Iron and Steel to hold the “The Fifth Conference of Plate Production Enterprises in the North”. More than a dozen steel mills in the north have decided to join forces to limit the production price. Under the influence of changes in the market environment, domestic steel mills saw a marked increase in production and maintenance in July. A total of 22 blast furnaces were inspected and repaired, involving 58.8 million tons of output. In August and September, a total of 6 steel mills planned for overhauling blast furnaces, including Shagang, Tai Steel, Bayi Steel, and Tangshan Iron & Steel, involved 77.5 influential production. Ten thousand tons. In July, a total of 18 steel bar production lines were arranged to reduce production and overhaul, involving an impact of 658,500 tons of output, which was nearly three times that of the previous month. In July, a total of 19 steel plant strip and strip production lines were arranged for overhaul, of which hot rolled coil, cold rolled coil, medium plate, and strip steel involved 290,000 tons, 50,000 tons, 95,000 tons, and 49,000, respectively. Ton.

According to the latest statistics from China Iron and Steel Association, the average daily production capacity of crude steel for the 78 key statistical iron and steel enterprises in July 2012 was 1,651,200 tons, and the average daily output remained at 1.99 million tons, which was a 1.8% increase compared to the previous period. There is statistical data. The highest position since the end of last year, compared with the average daily production capacity of the rebar price below 4,000 yuan at the end of last year, the average daily output was more than 200,000 tons.

This year's extreme cold in the steel industry has both policy influence and historical reasons. On the one hand, policy control and firepower is concentrated in the real estate industry, resulting in a significant impact on steel demand. On the other hand, tight capital chains lead to an endless stream of credit accidents. The risk monitoring of the entire steel industry has been deepened. In the continuing year, most of the steel trade with inefficient funds has been shuffled out of the market, and even steel mills are experiencing financial constraints.

On August 10, Baosteel announced the September ** price policy, which lowered the price of hot-rolled products by RMB 100 per ton. This was Baosteel's reduction in the ex-factory price of flats for three consecutive months, but this time the reduction was significantly narrower than the previous one. In July and August, Baosteel has significantly lowered the prices of cold-rolled and hot-rolled products. The cumulative reduction of the two types of products reached 400 yuan/ton.

The current steel price declines approaching steel production costs. For example, after the ** ton price of Shanghai's rebar has approached or fell below 3,500 yuan/ton, it is similar to its average cost. As a result, steel companies have experienced sharp declines in profits and even losses. If the situation that the price of steel products is close to or lower than the cost continues, the market will really force steel mills to reduce production, and the year-on-year decline in crude steel production will occur. This is a major advantage in promoting the recovery of steel prices.

The social inventory of steel has now decreased. In Shanghai, the tertiary rebar social inventories fell from 250,000 tons in the previous period to 220,000 tons, a reduction of 2-3 million tons, and the destocking process was accelerating. However, the current inventory of steel plants is still relatively large, and social stocks are transferred to steel mills. Once the demand peak season is reached, the organization resources of steel trade enterprises will increase, the terminal demand will gradually be released, and the reduction of steel mills will accelerate the stockpiling of steel products. Digestion, oversupply situation eased.

From the current situation, the collective reduction of output of steel plants has only boosted market confidence, but the actual upward movement of steel prices still depends on the results of inventory. Once stocks begin to decrease continuously, the reduction in steel demand will be less than steel stocks. With the reduction, steel prices will still rise. Therefore, comprehensive analysis and judgment are required for the trend of steel prices.

The data is close to the bottom to see how the policy responds

On August 9th, the National Bureau of Statistics released the highly concerned macroeconomic operating data for July. In July this year, the national consumer price index (CPI) rose by 1.8% year-on-year, narrowing by 0.4 percentage points from the 2.2% increase in June, setting a new low since February 2010, in two and a half years. It fell below 2% for the first time.

In addition, the published national producer price index (PPI) of industrial producers fell by 2.9% year-on-year, a negative growth for five consecutive months, the lowest since November 2009. It shows that the current economy is still at the bottom, and with the CPI continuing to fall back below 2%, the market can not help but worry that the macro economy will fall into a deflationary situation.

China’s CPI entered the “3 times” from February this year, and entered “2 eras” in June, and then “1 era” in July, only a half year apart. As for the growth rate of CPI in emerging economies, which is generally 3% as a point of equilibrium, China’s CPI is rapidly declining, which is worrying.

Deflation is a phenomenon in which the price of goods corresponding to inflation continues to drop. It is usually associated with a sharp reduction in the money supply and economic recession or recession. In the first half of the year, the money supply (M2) increased by 13.6%, and the newly increased ***** 4.86 trillion yuan. The growth rate of the national economy was still around 8%, and it was developing at a moderate rate.

After the CPI quickly falls below 2%, the macro economy may still falter at the bottom for a period of time. The current policy focus is on stable growth. The rapid decline in prices will provide room for monetary policy operations. Both interest rate cuts and RRR cuts are possible, but later It is more likely.

Statistics show that the PPI fell by 2.9% in July from the same period of last year and was negative for five consecutive months. This shows that demand is still weak during the economic downturn. In addition, the growth rate of the industrial economy also dropped by 0.3 percentage points from the previous month to 9.2% in June, hitting a new low of more than three years, which is in line with the trend of the decline in the PMI in July. At the same time, consumer growth has hit a new low of more than six years.

Although there has been a rapid fall in inflation in the short term, the trend of recent agricultural products and oil prices has seen a sharp rise, which is likely to affect the country in the end of the third quarter and the fourth quarter, when inflation levels may retaliate rebound. The situation, so how to deal with the recent policy is very critical, such as only looking at the data, in order to maintain growth and greatly ease the policy control, in the author's view, this is impossible and undesirable, and the most likely is to take the golden mean, take a step Looking at the next step is the most likely direction of the policy. Since the recent domestic exchanges are facing a general election, the United States is about to hold an election. The policy variables are very large. Only after the end of the year has passed smoothly and domestic and foreign economic trends are confirmed, can we make a definite policy choice. The policy was greatly relaxed during the year. The author was not hopeful.

When steel prices bottomed out

According to the data released on the website of the Ministry of Housing and Construction on August 12, from January to July this year, the nation’s urban housing security project has started 5.8 million new units, the operating rate was 77%, and basically 3.6 million units were completed, and an investment of 660 billion yuan was completed. At the end of last year, the Ministry of Housing and Urban-Rural Development announced plans to start the construction of affordable housing this year. It plans to start construction of 7 million sets of affordable housing and 4 million sets of completions. From the current situation, it seems to be much faster than expected. However, from the perspective of digesting steel stocks, in fact, it does not digest as many steel stocks. On the one hand, due to the monetary problem this year, a large number of originally implicit pledged resources have directly flowed into the market to realize cash flow. This directly leads to the continuous increase of market stocks in the short term. On the other hand, In the second half of the year, the steel mill adopts a flexible sales model, adopts a single discussion on a large number of steel stocks, and models such as value-preserving sales are dumped to the market, leading to the fact that once the steel price has risen, it has been thrown back by the large amount of resources thrown by the steel mills.

In the remaining three or four quarters of this year, if the policy does not change, if the regulation of real estate is not substantially relaxed, it is unlikely that steel prices will reverse significantly, and only a technical rebound will occur. Under such expectations, only the combination The cost of raw materials pays close attention to the price fluctuations of billets. Once the steel bills rebound and stabilized, they quickly cut into the steel market. We must reduce steel orders, increase market purchases, accelerate capital turnover, and reduce steel inventory risks. .