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New Year approaching: the supply and demand pattern changes caused by fear of the steel price callba

Release time: 2016-12-15
Browsing times: 134

 After national day, the market price in Jiangsu IF furnace event continues, prices continued to stride forward singing militant songs. Especially after entering December, with the Tangshan area limit frequency furnace production news spread in the market, the price rose again, "shuangshier" in Tangshan on the day of billet driven, one-day gain of more than 200 yuan / ton, Hangzhou market leading steel construction steel prices rose to 3500 yuan / ton, compared to the same period last year doubled.

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Figure 1: national day after the Hangzhou rebar price chart

Subsequently, in the mood to get out of the market, the market downturn, prices began to fall. In this connection, the author from the point of view of supply and demand and we explore the possible reasons for the callback.

A falling demand for resources is hard to digest

By the end of 1, the enterprise centralized settlement, the Spring Festival is coming, the market behavior may continue to decrease

In practice, most of the enterprises in December 15th, which is tomorrow may start full account clearing and inventory liquidation, so the construction of this month in the subsequent time enterprises may not be able to pay money and projects to accelerate the ending, which led to rapid decline in demand is likely to start from next week, the resources are difficult to digest, inventory pressure gradually increase.

2, the domestic price is higher than the international market prices, exports suffered great difficulties

In accordance with the practice, due to the domestic market in January and February for the consumer off-season, steel mills in January and February will actively seek to ease the pressure on export sales. But at present, the Middle East and Eastern European countries and regions export price is lower than the current domestic price of thread, domestic resources lack of export competitiveness, so the current domestic steel export orders and orders of poor resources through increased export pressure digestion, turning to the domestic market.

Two, steel profits higher, effectively reduce the supply of resources is difficult

1, short process steel production cycle reduction, resource reduction may be lower than expected

In the context of the production capacity of the Jiangsu intermediate frequency furnace all production, resource supply significantly reduced. However, compared with the same period last year, due to the total loss of last year's steel mills, especially short process loss is particularly serious, so most of the short process steel production ahead of schedule, almost 30-45 days before the Spring Festival is a holiday. This year, due to the current price at a high level, with advanced production technology of mini mills is very profitable, there is basically at full load or overload production, it can be inferred that the current supply of minimill resources compared with the same period last year with the passage of time may bujianfanzeng.

2, long process of blast furnace profit objective, if furnace event caused by resource reduction may be lower than expected

Last year, prices continued to fall, the steel mills are basically in the break even line, near the end of the year, some of the long process of steel mills began to conduct periodic overhaul, reducing the supply of resources. This year long mills profit is much better than last year, steel production enthusiasm is high, the recent initiative to overhaul steel resource is few, most mills are full load production, so the long process of resource supply compared to last year may not fall.

3, to seek profit quickly realized, the steel mills may begin to return from the general

Although the profit is much higher than that of steel thread, but because of the particularity of business as long as dealers, distributors have a certain amount of inventory, in the recent rapid rise in the price of the case, as the existing inventory of profitable dealers. In addition, due to the limitations of the steel circulation and sales volume of small scale, in the current high price situation, almost no Yougang dealers continue to consider the procurement of goods, resulting in production of high quality steel although more lucrative sales but may encounter some problems. This part of the previous because of the thread production is not profitable or even loss for the general transfer of excellent steel mills began to gradually optimize the general, increase the production of thread, in order to quickly sell, to achieve the return of funds and profits realized.

In general, no major policy changes under the premise, with continuous deepening of the off-season, demand was significantly decreased and the steel profits high, the market supply and demand balance may occur at both ends of the change, the price may appear highs.

 

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