English | 中文

Industry Dynamics

Company Dynamics Industry Dynamics
Export driven steel market may make a slight correction after "opening up"
time:2007-02-07 00:00:00 source: Angang Group Xinyang Steel Co., Ltd

In the face of the "opening up" pattern of "early start, fast warming, rising price and good situation" in the domestic steel market since this year, analysts believe that this round of market is mainly driven by exports, which is supported by low inventory, strong domestic demand and high cost. However, considering that the early rise is too fast, and the export tax rebate policy may be adjusted, the steel price in the future may slightly callback. Since January 1, 2007, the price of steel in the domestic market has risen rapidly. According to statistics, yesterday, the price of 12mmhrb335 screw steel in Shanghai market increased by 7.07% compared with the end of 2006, the price of 6.5mm high-speed wire rose by 5.05%, the price of 0.5mm cold rolled sheet rose by 1.9%, the price of 3.0mm hot rolled sheet rose by 8.04%, and the price of 8mm medium plate rose by 7.51%. The large increase and the fast rise exceed the expectations of many insiders. Bao Siwen, a senior market person in Shanghai, said that there was an abnormal phenomenon in the steel market this year that "there was little demand, there was not much inventory, trading was not prosperous, and the price rose". A senior trader pointed out that one of the important reasons for this phenomenon at the beginning of this year's steel market is the export driven. Last year, the net export volume of domestic steel increased significantly, making it the largest steel exporter in the world. This strong export momentum continued into January this year. Although the export data in January has not been calculated, the steel export volume is expected to remain high, only slightly lower than last December. Analysts believe that as the market holds a strong expectation for the decline of export tax rebate rate, enterprises are scrambling to increase the export strength before the policy is issued, which results in the general phenomenon that some steel mills reduce the quantity of domestic supply to ensure export contracts, and some varieties in the domestic market are in short supply at this stage. Industry insiders said that steel export prices also rose in January this year, and the price of hot coils increased by 20-30 US dollars compared with December last year. Therefore, it is reasonable for the price of domestic steel to rise with the increase of export volume and price. Three factors support analysts believe that the current steel social inventory is still at a low level, domestic demand is still strong, and the cost is rising rapidly, thus forming a strong support for steel prices. According to statistics of China Iron and Steel Industry Association, the steel inventory of large and medium-sized steel mills at the end of December was 5.656 million tons, a decrease of 500000 tons or 8.1% compared with that at the end of November. The decrease of inventory reduces the sales pressure of steel mills and improves the enthusiasm of price adjustment. Since February, WISCO and Angang Steel have increased their factory prices in March, and the base prices of main products have increased by 100-400 yuan / ton. Since 2006, the stock level of social steel has been keeping a downward trend. Taking the inventory statistics of cold and hot coils in some central cities as an example, the inventory at the end of December 2006 was 1.8 million tons, down 26.2% from the beginning of the year. Industry insiders believe that in the process of price rise, spot resources are in short supply, varieties and specifications are uneven, and the phenomenon of out of stock and out of stock occurs frequently, forming a market atmosphere of "tight goods and high prices". The price increases are boosted by the artificially tense situation caused by the closing, reluctant or limited sales of the merchants. Zhang Shibao, a researcher at China Merchants Securities, said that at present, it is winter, many steel plants stop production and maintenance to reduce the supply of resources, but the steel consumption demand has not been significantly reduced due to the warm winter, so the domestic demand is still very strong compared with the supply, which has driven the steel price to continue to rise. In addition, since 2007, the price of imported iron ore has been raised, the price of coal, electricity and other raw and combustion materials has been rising, and the poor transportation has driven the cost up, which is also the driving force of steel price rise. Analysts believe that the price of steel in the future market may be slightly reduced due to the rapid rise of steel prices in the early stage and the possible adjustment of export tax rebate policy, but the overall situation of steel prices in the first quarter can still keep rising. Zhang Shibao said that steel prices were expected to rise 3-5% in the first quarter, but now the market has achieved this increase ahead of time. Considering the current off-season, such a rapid increase may be difficult for the market to accept, so the steel price in the future market may slightly callback. But the average price in the first quarter can still rise by more than 5% compared with the end of last year. There is also the industry will be the current rise in steel prices as "overdraft" after the market. In March after the Spring Festival, the steel market will enter the peak consumption season due to the successive construction projects. At present, some businesses simply put the market after the festival before the festival, and put the market price up again. However, the excessive increase of market price before the festival is not conducive to the stability of the market after the festival. Industry insiders believe that at present, the steel price is rising too fast and the price level is on the high side. It is quite possible that the steel price will fall in March and April. If the export tax rebate adjustment policy is introduced, it will have a huge impact on the market. A precedent to be followed is that in April 2005, the policies of canceling the tax rebate for billet export and reducing the tax rebate rate for steel export by 2 percentage points, and canceling the relevant tax policies of "processing special steel for export" were once the important factors that led to the continuous decline of the domestic steel market for ten months. Yu Ruitai, an early warning expert in Shanghai's steel industry, also said that if the export tax rebate adjustment policy is introduced, it will have a greater impact on domestic steel prices. At present, the market has expected this, and the electronic disk has shown a downward trend yesterday. (China Securities News)

Angang Group Xinyang Steel Co., Ltd

Quality service, quality assurance


Angang Group Xinyang Steel Co., Ltd | Copyright     Record number:Yuicp preparation no.19000436-1