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The weak steel market is still cold
Lu Xiaohua, Everbright Futures Steel analyst, said that China’s steel production accounts for 36% of the world’s total, and consumption accounts for 33% of the world’s total, ranking first in the world. In China's steel end-use market, construction accounted for 58%, machinery and electronics accounted for 14%, and transportation accounted for 8%. The construction industry as the first consumer market for steel products is not optimistic. From January to February 2009, the cumulative growth rate of China's real estate development was only 1% year-on-year, while the accumulated growth rate in the same period of 2008 was 32.9%. The year-on-year cumulative growth of industrial production in January-February 2009 was 3.8%, compared with 15.4% in the same period of last year and 5.7% in December 2008. In the downstream consumption, the output of automobiles is relatively good. In February 2009, the output of automobiles was 858,800 units, a year-on-year increase of 22.9%. If we accumulate the production data for January-February 2009, a total of 1,526,600 vehicles will be produced. The year-on-year growth rate was about 13.5%. From January to February of 2008, China suffered a snowstorm in one hundred years, and the current consumption may be affected. Excluding this factor is only whether the production data can continue to grow and needs further attention. Global data shows that the real estate market in the United States and Europe has been depressed. The transportation market also performed poorly. According to Macquarie's survey, global vehicle production fell by 42% from December 2008 to January 2009.
Therefore, despite the promising start-ups on the first day of the listing of steel futures, rebar and wire rods rose by 4.77% and 6.22%, respectively. However, the fundamental situation of the global steel market is still not optimistic: a large excess of global steel production capacity. According to WDS data, the global crude steel capacity utilization rate dropped to 65.9%, the lowest level since its record in January 1969. Excluding China, the capacity utilization rate was only 55.8%, the first time since 1930s; the construction market and transportation consumption There has been a rare decline; there is room for substantial price cuts in raw material market prices. According to industry sources, at a time when Chinese iron and steel companies are demanding sharp price cuts for iron ore, iron ore suppliers who are interested in securing sales have reached an agreement with Chinese steel companies, agreeing to temporarily The price of iron ore this year has been adjusted downward by 40% on the basis of last year. At the same time, Japan's largest steel company Nippon Steel and BHP Billiton Mitsubishi Alliance (BMA) have just reached an agreement on the coking coal benchmark price in 2009, the price is set at 128-129 US dollars per ton, compared with the price of 300 US dollars per ton last year , a sharp drop of 57%.
This shows that in markets where supply exceeds demand and excess production capacity, the price of raw materials determines the trend of commodity prices, and steel prices will fall around costs.
Overcapacity restricts rising steel prices
Li Jingkang, the first futures steel analyst, believes that steel futures have not been active in the coming days, and the overall trend is relatively stable. The main contract of rebar 0909 has shown a downward trend. This is in addition to the delivery of steel futures. Long, the wait-and-see attitude is relatively strong, but the main reason is that the steel industry itself has a serious overcapacity, which restricts the rise in steel prices.
According to the latest statistics, at present, China's steel production capacity is estimated to be 660 million tons. If we add large-scale steel projects under construction such as Fangchenggang and Zhanjiang Port, the final production capacity will exceed 700 million tons. With the current production capacity of 660 million tons and 85% normal and effective calculation, 565 million tons of crude steel will be produced each year. In 2008, China’s actual production of crude steel was 500 million tons, and direct and indirect exports were about 100 million tons, and the actual domestic effective demand was only 400 million tons. Therefore, even if the normal production capacity is 565 million tons and the actual output is 500 million tons, Then there is a surplus of 12%; if calculated according to the actual effective demand, there is a surplus of 29%. Therefore, the overcapacity of steel production in China is very serious.
In fact, as early as 2005, the government introduced the “Iron and Steel Industry Development Policy†aimed at controlling production capacity and raising the degree of concentration. However, from the perspective of policy implementation, it is quite unsatisfactory. The policy is to encourage the elimination of outdated production capacity, while eliminating backward production capacity, while allowing equal replacement of outdated production capacity, that is, when outdated production capacity is eliminated, new equivalent production capacity that meets industrial policy can be simultaneously established. However, the fact is that some companies There is no effective elimination of backward production capacity, and new iron-smelting capacity and steelmaking capacity have also been newly built, making the steel production capacity continue to hit a record high in recent years.
In addition, it can not be ignored that China’s iron and steel enterprises have diversified organizational forms and the production costs vary greatly. Enterprises with lower costs have stronger market competitiveness, and companies with higher costs will be overwhelmed but have higher costs. In order to pay a certain fixed fee, even if it is lost, it must be maintained at a certain level of production. Therefore, from the point of view of production cuts alone, the problem of oversupply of resources can only be solved temporarily, and fundamental problems cannot be solved. Investors participating in steel need to grasp the trend of the steel industry this year and correctly understand the grim reality of the steel industry in order to achieve profitability in hedging or speculation.
The cost inventory suppresses the rebound of steel prices
He Xianggui, an iron and steel analyst at Changjiang Futures, said that at present, the two most important factors affecting steel prices are the cost and inventory of steelmaking. Coke and iron ore are the main raw materials for steelmaking. Usually, tons of steel require 1.6 tons of 63.5% taste iron ore and 0.5 tons of coke. China imported 46.74 million tons of iron ore in February, an increase of 14.09 million tons from January, an increase of 10 million tons from the same period of last year. This is mainly due to the fact that international shipping charges are at an ultra-low level, and the demand for major foreign iron ore will drop sharply, resulting in the price of imported ore being 100-140 yuan less than that of domestic ore, and there is still a large downward adjustment of domestic ore.
In addition, the biggest uncertainty in the price of iron ore comes from the negotiation of international iron ore mine price. The price of the agreement in 2008 was roughly 40% higher than the current spot price of iron ore in the world. Therefore, it is expected that the price reduction of the long-term ore price will only be a matter of decreasing the price of iron ore. In terms of coke, China’s coke export volume declined sharply, with a year-on-year growth rate of 94.9% in February, while coal imports hit a record high of 22 months. This is also due to the fact that foreign coal is cheap and international shipping prices are low. Therefore, domestic coal prices will continue to decline.
In terms of inventory, domestic steel prices rebounded in January and February, and the domestic steel industry's operating rate increased. However, due to the fact that the demand for steel products did not really pick up, steel stocks continued to rise, the highest in nearly five years. With the arrival of construction season in April and the commencement of the country’s investment in infrastructure projects, inventory of construction steel products has been declining. However, sheet stocks are still increasing.
China's construction industry consumes 54% of the total consumption of steel, of which real estate and commercial real estate account for about 40%. The real estate industry is obviously hard to pick up in the short term. Although most of the country’s 4 trillion economic stimulus packages are invested in infrastructure, the demand for steel products by the infrastructure is essentially rigid and it is difficult to drive steel consumption alone. In addition, China’s crude steel production capacity is extremely serious. At the end of 2008, it was 660 million tons, which exceeded actual demand by about 100 million tons. Surplus production capacity also suppressed the recovery of steel prices.
In summary, the current domestic steel industry in the real estate industry is in a sluggish state, and the cost of steel products has room to decline. The excess production capacity and excessive inventory further suppress the rebound in steel prices. It is expected that the steel market will maintain a low demand for a period of time in the future. , low price operating status.
Steel prices can hardly be said that the inflection point has been running low and will continue
In the context of the global economic recession, China has shown strong positive influence in most commodity markets. Since the beginning of the year, all commodities have steadily increased. Only the apparent consumption of aluminum ingots has fallen by 10.7% year-on-year, and the apparent consumption of copper has been The ratio rose by 36.1%, the apparent zinc consumption increased by 8.7% year-on-year, and the apparent consumption of crude steel rose by 7.5% year-on-year. With the exception of China, the rest of the region is still in a serious downturn, and the apparent demand for metals has fallen at a rate of 30%-50% per year. Has China's steel market's consumption really rebounded? Did the steel market really have a price inflection point?