Steel prices fall in full territory Local investment slows down

In November, the ex-factory price of mainstream steel enterprises was substantially reduced, and some steel companies’ policies such as covert subsidies and concessions emerged one after another. The steel industry as the industry most affected by the macroeconomic fluctuations, the issue of the lack of succession of local government's subsequent investment has affected the survival environment of domestic steel enterprises. In the current situation where the investment slowdown is a foregone conclusion, domestic steel companies are facing the “winter” problem.

Reduced prices into steel "main theme"

Price cuts are becoming the main theme of the recent steel industry. According to the latest data, the price of 63.5** powder has fallen from 151 US dollars/ton to the current price of 133 US dollars/ton, and it has fallen by an average of 18 dollars in a week. In early September, its quotation on the outer disk was as high as 190 to 191 US dollars/ton. In two months, iron ore prices have fallen by as much as $60 from the highest point of the year, and the decline continues. At the same time, steel prices in the domestic steel trade market have also experienced a diving decline of several hundred dollars.

Last month, in addition to Baoshan Iron and Steel in November, the main ex-factory price was flat, and the ex-factory prices of Anshan Iron and Steel, Wuhan Iron and Steel, Shougang, and other plate manufacturers were substantially reduced, and some steel mills’ policies such as covert and concessions emerged one after another. The cumulative declines in the monthly prices of steel products such as construction steel Shagang and Hebei Iron and Steel were all above RMB 300/ton, and the cumulative price reductions of steel mills such as Chenggang and Pangang in the western region were as high as RMB 600/ton or more. The missing value-preserving sales policy was also launched by some steel mills again, resulting in a situation where market prices and steel mill prices have fallen one after another.

Yuan Zhibin, researcher of China Investment Advisor Metallurgical Industry Co., Ltd. pointed out that the current economic downturn in Europe has resulted in a sharp drop in iron ore demand, leading Vale, the world's largest iron ore company, to transfer iron ore originally planned for Europe to China, resulting in domestic iron ore. The supply has soared. However, the domestic market was affected by the real estate policy. The growth rate slowed down and the demand was weak. Major steel mills also cut production. The contradiction between supply and demand has caused the domestic steel industry to gradually enter the cold winter.

The "2011-2015 China Steel Industry Investment Analysis and Forecast Report" issued by China Investment Advisors shows that in 2010, the annual profits of the three major mines of Vale, Rio Tinto and BHP Billiton were as high as 48.7 billion U.S. dollars, which is 3.5% of the total profits of the Chinese steel industry. Times. The predicament of iron ore supply subject to human influence has seriously affected the development of the domestic steel industry.

Domestic steel is not strong

According to the latest monitoring data provided by the well-known steel spot trading platform, the Nisshin Shinkansen, in the past week, the price of steel in the Shanghai region has fallen slightly, and the single-week price has fallen by 40 yuan/ton. As of October 28, it was reported at 4,310 yuan. / Ton; Beijing regional steel prices tentatively higher, as reported on October 28 at 4250 yuan / ton, single-week prices rose 10 yuan / ton; Guangzhou regional steel prices fell after the rebound, as reported on October 28 at 4,530 yuan / ton, single Weekly prices fell by 90 yuan/ton.

According to the data of the steel spot trading platform of the Nisshin Shinkansen Steel Line, as of October 28, the average price of 25mm secondary rebar for quality rebar in major domestic markets was 4356 yuan/ton, down by 40 yuan/ton from last Friday; the average price of 6.5mm high-line was At 4550 yuan/ton, it was down 37 yuan/ton from last Friday. On the whole, after a deep fall, the steel mills have reduced their production cuts and price cuts, and the market mentality has begun to recover. The short-term stability will has obviously increased.

Liu Qiuping, chief analyst of the Nisshin Shinkansen, said that a signal of fine-tuning of monetary policy may have emerged.

In addition, in the first three quarters of this year, the fiscal deficits of the country's 31 provinces, autonomous regions, and municipalities reached a deficit of 1.77609 trillion yuan. Behind the huge fiscal deficit, the problem of the lack of investment by local governments in succession will be highlighted.

According to analyst Zhang Yanlin of China Investment Consulting Group, China’s steel industry is large but not strong, its industrial concentration is low, and its dependence on the three major mines is very strong. This has caused the domestic iron and steel industry to be subject to external control over a long period of time, and it is difficult to withstand economic fluctuations internally. The risk brought. To change this status quo and safely weather the cold winter, domestic steel companies need to accelerate structural upgrading, strengthen mergers and reorganizations, eliminate backward production capacity, increase industrial concentration, and on the other hand need to accelerate the pace of “going out” and control overseas iron ore resources. .