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[industry dynamics] steel market enters peak season ahead of schedule: steel price keeps innovating

Date: 2017-02-23
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China's steel market continued to rise after the Spring Festival, in advance of the traditional "gold, silver and silver four" peak season prosperity.

The composite steel index stood at 3972.94 as of February 22, up 0.13% from the previous day, according to Mysteel.However, the index is up nearly 10 per cent from before the Spring Festival.The surge in steel spot prices has been accompanied by a surge in iron ore spot, rebar and iron ore, among other black lines.However, after continuing to hit new highs, the black sector futures face a correction on February 22.

Mysteel steel analyst xiang-chun xu, said in an interview with surging news "fairly optimistic expectations, coupled with seasonal demand picks up, appeared in, shall also the coming of the steel is better than last year.""Steel mill profits have been rising," a person at a steel mill in the east told

The market's optimism stems in part from good expectations for infrastructure in 2017.In January 2017, the national development and reform commission approved 18 fixed asset investment projects with a total investment of 153.9 billion yuan.35 new railway projects will be launched this year, and investment in railway construction will remain high.In addition, according to the provincial fixed asset investment plans, the accumulative investment of the provinces that have announced the target has exceeded 40 trillion yuan, of which the basic focus is on the construction of transportation facilities.It is widely believed that infrastructure will lead demand for steel throughout the year.

In addition, since the steel industry entered the de-capacity phase in 2016, the market has held a contraction expectation of supply.

According to the statistics of China iron and steel association (cisa), the average daily crude steel production of steel enterprises was 1.607 million tons in late January 2017, down 0.18% from mid-january.Crude steel production in late January hit a daily low since mid-march 2016.

At the same time, Mysteel research data shows that the current domestic momentum of blast furnace capacity utilization rate increase is not obvious, as of February 17, 163 steel blast furnace operating at 74.86%, with flat last week, capacity utilization by 82.38%, weeks, down 0.66% month-on-month.Mysteel believes that due to the reduction of production capacity and the increase in environmental protection, the overall production of steel mills has been somewhat restrained, and the low supply has provided the basis for the rise in steel prices.

It is worth noting that market expectations of a contraction in supply have intensified in recent days.The convening of the "two sessions" and the ministry of environmental protection's special inspection of air quality in the first quarter of 2017 have all contributed to stricter environmental requirements for steel companies in hebei and other regions.In addition, "ground bar steel" remediation efforts are continuing, the results of local inspections are also announced from time to time.

But the continued rise in steel prices is also causing concern.

On February 15, the shandong province development and reform commission website by forwarding a 5 departments jointly issued by the national development and reform commission and other physical file on the further implementation of the operation of pressure balance policy to promote the steel market has kept notice "(hereinafter referred to as the" notice "), is designed to secure the achievements of dissolve excess steel production capacity, improve the level of effective supply of steel, and avoid high volatility in the market.

The personage inside course of study thinks, the "notice" has been issued before the Spring Festival, but for a period of time after the Spring Festival by shandong mountain development and reform commission (NDRC) closed to the public, the reason is that after the Spring Festival steel prices rise, or need to have a stable price.

In view of the recent phenomenon of high factory price of steel mills, on February 20, the steel association held a special symposium on the production and operation of long material enterprises.At the meeting, liu zhenjiang, secretary of the CPC committee and secretary general of the steel association, delivered a speech entitled "recognizing the situation and jointly maintaining the smooth operation of the steel market".Liu zhenjiang pointed out that longcai enterprises should maintain their pricing power for this year's prices, so it is good to seek stability. After a short period of inflation, they will spit out the price.Mr Liu's speech even included harsh phrases such as "waiting for prices to rise for benefits".

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