With short-term concerns, long-term inflation will help steel prices rise December 25, the central bank raised the benchmark interest rate again by 0.25 percentage points, so far the central bank has issued two tightening monetary policies of raising interest rates and raising the reserve ratio six times. With regard to the policy of austerity, there is a high probability that China Steel will suffer a policy strike in the short term. In the coming year, with the economic situation in Europe, the United States, Japan, and other developed economies improving, the large amount of liquidity invested in the market in the previous period will also play a role in boosting the rise of commodities. By then, China will face greater input-type inflation. Pressure, which will help the long-term rise in steel prices.
In the off-season, consumption is expected to be optimistic. In the future, the optimistic construction steel itself will have strong seasonality. After entering the winter, the demand will be greatly reduced. This directly reflects the period during which inventory has been increasing over the winter. With the sudden turning of the weather recently, construction sites in more and more regions in China have begun to stop construction, and the demand for construction steel has also been greatly reduced. At present, far from the Spring Festival, speculative stocking has not yet begun to expand. The weak demand during this period has a greater impact on steel prices. The overall demand for construction steel will be relatively strong next year. The increase in demand will mainly come from affordable housing, high-speed rail and subway construction.
The production capacity is still under control for a long time and there is a fear of rebound in the short term. After the completion of the task of energy conservation and emission reduction, the resumption of production by steel plants has become a trend, but the output will remain at a moderately low level, resulting in a slight increase in steel production. In November, China’s output of crude steel, pig iron, and steel increased by 4.8%, 3%, and 4.6% year-on-year, respectively, and domestic crude steel production again increased positively after falling for the third consecutive month. Although crude steel production has increased, absolute The increase is limited. As energy-saving emission reduction and elimination of outdated production capacity is a long-term industrial policy, the future policy will have more absolute influence on the suppression of steel production capacity. The long-term problem of excess production capacity is expected to ease.
Inventory has fallen for months, and there may be a rebound in the off-season. Inventory in the domestic construction steel market for the first time in nearly two months has risen continuously for the first time in the past two weeks. From December 17th to 24th, the total stock of wire rods was 1,098.2 thousand tons in the week, and the total amount of rebar stocks was 4,111,400 tons. At present, the national inventory of rebar and wire rod is just at the lowest level of this year, and it is also the peak level of inventory in previous years. As the demand for construction steel will continue to grow to a greater extent in the future, the policy of energy-saving emission reduction and elimination of outdated production capacity is expected to contain a certain amount of production capacity. The situation of oversupply of the steel market will obviously improve in the long term. At present, the pressure on the rise of steel prices by construction steel stocks across the country has been greatly reduced, and even in the future it will be the reason for the rise in steel prices. However, the construction steel has obvious seasonality. In the off-season consumption season, there is an upward trend in the inventory during the off-season. In particular, under the pressure of reduction in policy production and the increase in production, the trend of continuous increase in inventory in the past two weeks is likely to increase. Continuation in the cold winter.
The increase in cost still continues to boost steel prices. In recent years, the rise in steel prices has been inseparable from the speculation of rising iron ore costs. It is understood that Rio Tinto, one of the world’s three largest iron ore suppliers, has informed Chinese steel companies that the contract price of iron ore will increase by 7.6% in the first quarter of next year. In addition, iron ore suppliers Vale and BHP Billiton will also similarly increase the supply price of iron ore in the first quarter of next year. In addition, the Ministry of Industry and Information Technology recently disclosed that the profit of the steel industry this year is only 3.5%, which is the lowest in all industries, and the average profit rate of various industries is 6%. Under such low-margin operation, steel mills are bound to increase steel prices to increase production costs such as the transfer of iron ore. At present, the price spread between ** and spot is relatively small. Under the condition of taking into account negative tolerances, the ** price in some places is even lower than the spot price. This spread structure is conducive to the more effective delivery of the spot market to the ** market. . With the meager profit margin of the steel industry and relatively small price spreads, the rise in iron ore prices in the future may again be the driving force behind the rise in the steel.
Analysis of market outlook In the long run, the situation of oversupply in the steel market will improve in the future. The current inventory level has been significantly reduced, and the pressure on steel prices will be reduced accordingly. Rising costs such as iron ore are still the main reason behind the increase in steel prices. Long-term inflation expectations are also conducive to further increases in steel prices. In the short term, the market's concerns about control have greatly dampened bullish confidence. Demand in the off-season consumption season has been seasonally weak. After the completion of the policy task, steel mill production capacity has recovered slightly. In winter, the arrival of inventories may begin to increase seasonally. Considering the above factors, the pattern of long-term steel price rise has already been laid, and even after the Spring Festival, it may produce a breakthrough market. In the process of rising, during the off-season cold season, steel prices will inevitably have a greater scope. The callback will give investors a good opportunity to buy long-term bullishness.
In the off-season, consumption is expected to be optimistic. In the future, the optimistic construction steel itself will have strong seasonality. After entering the winter, the demand will be greatly reduced. This directly reflects the period during which inventory has been increasing over the winter. With the sudden turning of the weather recently, construction sites in more and more regions in China have begun to stop construction, and the demand for construction steel has also been greatly reduced. At present, far from the Spring Festival, speculative stocking has not yet begun to expand. The weak demand during this period has a greater impact on steel prices. The overall demand for construction steel will be relatively strong next year. The increase in demand will mainly come from affordable housing, high-speed rail and subway construction.
The production capacity is still under control for a long time and there is a fear of rebound in the short term. After the completion of the task of energy conservation and emission reduction, the resumption of production by steel plants has become a trend, but the output will remain at a moderately low level, resulting in a slight increase in steel production. In November, China’s output of crude steel, pig iron, and steel increased by 4.8%, 3%, and 4.6% year-on-year, respectively, and domestic crude steel production again increased positively after falling for the third consecutive month. Although crude steel production has increased, absolute The increase is limited. As energy-saving emission reduction and elimination of outdated production capacity is a long-term industrial policy, the future policy will have more absolute influence on the suppression of steel production capacity. The long-term problem of excess production capacity is expected to ease.
Inventory has fallen for months, and there may be a rebound in the off-season. Inventory in the domestic construction steel market for the first time in nearly two months has risen continuously for the first time in the past two weeks. From December 17th to 24th, the total stock of wire rods was 1,098.2 thousand tons in the week, and the total amount of rebar stocks was 4,111,400 tons. At present, the national inventory of rebar and wire rod is just at the lowest level of this year, and it is also the peak level of inventory in previous years. As the demand for construction steel will continue to grow to a greater extent in the future, the policy of energy-saving emission reduction and elimination of outdated production capacity is expected to contain a certain amount of production capacity. The situation of oversupply of the steel market will obviously improve in the long term. At present, the pressure on the rise of steel prices by construction steel stocks across the country has been greatly reduced, and even in the future it will be the reason for the rise in steel prices. However, the construction steel has obvious seasonality. In the off-season consumption season, there is an upward trend in the inventory during the off-season. In particular, under the pressure of reduction in policy production and the increase in production, the trend of continuous increase in inventory in the past two weeks is likely to increase. Continuation in the cold winter.
The increase in cost still continues to boost steel prices. In recent years, the rise in steel prices has been inseparable from the speculation of rising iron ore costs. It is understood that Rio Tinto, one of the world’s three largest iron ore suppliers, has informed Chinese steel companies that the contract price of iron ore will increase by 7.6% in the first quarter of next year. In addition, iron ore suppliers Vale and BHP Billiton will also similarly increase the supply price of iron ore in the first quarter of next year. In addition, the Ministry of Industry and Information Technology recently disclosed that the profit of the steel industry this year is only 3.5%, which is the lowest in all industries, and the average profit rate of various industries is 6%. Under such low-margin operation, steel mills are bound to increase steel prices to increase production costs such as the transfer of iron ore. At present, the price spread between ** and spot is relatively small. Under the condition of taking into account negative tolerances, the ** price in some places is even lower than the spot price. This spread structure is conducive to the more effective delivery of the spot market to the ** market. . With the meager profit margin of the steel industry and relatively small price spreads, the rise in iron ore prices in the future may again be the driving force behind the rise in the steel.
Analysis of market outlook In the long run, the situation of oversupply in the steel market will improve in the future. The current inventory level has been significantly reduced, and the pressure on steel prices will be reduced accordingly. Rising costs such as iron ore are still the main reason behind the increase in steel prices. Long-term inflation expectations are also conducive to further increases in steel prices. In the short term, the market's concerns about control have greatly dampened bullish confidence. Demand in the off-season consumption season has been seasonally weak. After the completion of the policy task, steel mill production capacity has recovered slightly. In winter, the arrival of inventories may begin to increase seasonally. Considering the above factors, the pattern of long-term steel price rise has already been laid, and even after the Spring Festival, it may produce a breakthrough market. In the process of rising, during the off-season cold season, steel prices will inevitably have a greater scope. The callback will give investors a good opportunity to buy long-term bullishness.
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