Steel prices cycle may end

On April 26, the latest data released by the China Iron and Steel Association (hereinafter referred to as “the China Steel Association”) showed that the average daily output of crude steel for the members of the steel associations in mid-April was 1.8891 million tons, a decrease of 0.48% compared with the same period last year; The average daily output of steel was 2,115,800 tons, a decrease of 0.38% over the previous period.

The data shows that in addition to the steel industry's average daily crude steel output remains high under the loss of the industry, the destocking pace is still slow. In mid-April, the steel stocks of the steel association member companies were 13.6661 million tons, a decrease of 0.52% compared with the end of the decade.

Analysts in the industry told the “Securities Market Weekly” that after the Chinese New Year, domestic steel prices continued to fall. As of now, the cumulative decline in construction steel and plate prices has reached 300-400 yuan/ton, and the price of hot-rolled coils has fallen by around 600 yuan/ton. .

Analysts believe that the major and medium-sized enterprises of the Steel Association of China in January and February in 2013 had a small profit of 2.336 billion yuan, but taking into account the increase in the proportion of high-priced mines used by steel mills in March, and many steel mills will conduct contracts in March. It is expected that large and medium-sized steel companies will make a loss in March and the amount of losses will further expand in April. Compared with the latest steel production costs and market prices, steel mills have generally suffered losses of 150-200 yuan/ton, and some steel mills have reduced production and overhaul, but the rate is not large.

In addition, he also judged that since steel prices have been at the bottom of the past six years, there is little room for the continued decline in steel prices. On the one hand, the steel mills have fallen into a full-scale loss. It is unrealistic for steel traders to negotiate full subsidies with steel mills by drastically falling prices; on the other hand, the current market stock is decentralized, and the inventory of large-scale steel traders is generally low. Inventory has decreased significantly compared with previous years, and most of the inventory resources are depleted. The willingness of steel traders to voluntarily sell inventory is insufficient. Therefore, there is little room for the domestic steel price to continue to fall in the later period, but the space for steel price rise is still constrained by the overcapacity and steel trade funds. It is expected that the domestic steel price will generally be dominated by turbulent operations in May.

China Steel Association also said that the steel mill price cycle may end. Among them, the factory prices of Baosteel's hot-rolled, cold-rolled and other mainstream varieties remained unchanged in May, but the order preference margin has increased. While the price of Wuhan Iron and Steel Sheets was reduced by 100-240 yuan/ton, the price of Anshan Iron and Steel Plate was lowered by 100-150 yuan/ton, the price of Shougang's coils was lowered by 150 yuan/ton, and the price of Hegang's plate was lowered by 200-250 yuan/ton, indicating that the steel mills were on the market. Future expectations are still not optimistic. Although the steel industry is already in peak season, the demand remains tepid, and the domestic steel market is still facing a conflict between supply and demand. It is expected that prices will fluctuate in May.

At a recent industry conference, the Deputy Secretary-General of China Iron and Steel Association said to the "Securities Market Weekly" that crude steel production in 2013 is expected to be about 746 million tons, with an apparent consumption of about 700 million tons, and the full-year steel price will appear before Low, high, turbulent upward trend.