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Multiple factors under the unrest in steel prices

Telease time:2016-07-19

  Recently, steel market superposition of multiple factors, slack season, shortage of coal tar, freight new rules and so on, the market chaos, let many investors feel at sea. Currently, soared in July and August of rebar inventories to go bad, still are one of the main contradictions in the market. Especially in the steel construction remains high, did not appear obvious production situation, supply the pressure constant, if that part of the inventory in October can‘t effectively to drop, the market confidence will hit again. Overall, in the fourth quarter of rebar prices fluctuate in 2100-2400 yuan/ton of probability is bigger.
  
  A tighter macro environment
  
  Although the fed meeting in September decided to postpone raising interest rates, and lowered its target for the interest rates in 2017, but the market believes that yellen said "probability" larger increases in interest rates in December, is not a bluff, subsequent American economic fundamentals is the root of all problems. The recent domestic funds also continued tight, central Banks tighten short-term money, control the market risk, the Shanghai overnight interbank interest rates sharply higher.
  
  End demand or continue to weaken
  
  Liquidity tightening will be formed on asset prices. But the terminal demand of steel is also not optimistic. Although the real estate sales is still very hot, August 1 - the national commercial housing sales growth of 19.8%, slower than 1-1.1% in July to expand, and real estate boom has conduction to some hot line 2.5 and 3 cities. But in contrast, the real estate growth is still in rapid decline, new development in August 1-12.2% growth in the new site area, the growth of more than 1 - fell 1.5% in July, convert the new construction area has dropped to 3.26% growth. At the same time, the area of land acquisition has long been considered a leading indicator of new development, July and August, land acquisition area was also expanded again, largely because of a second-tier cities of land supply is limited, and the 234 cities inventory pressure is still large, developing enthusiasm remains sluggish. Infrastructure, July and August infrastructure investment growth has fallen significantly from that of the first half of the year, in the local fiscal funds nervous, deficits, under the limit of subsequent increase infrastructure investment to the difficulty of the stronger, difficult to counteract the effects of real estate new downward.
  
  The cost of lift the compression steel mills profit
  
  Under the influence of the policy of "276 days", coking coal production plunged more than 10% this year, coking coal, coke prices rise quickly, quickly pushed up steel cost. And new rules on the road, overload check to transport large impact, short-term rate soared, under the background of the current weak demand, transport costs cannot be passed on to downstream users, and increase the burden of steel. Current research shows that transportation cost of per ton steel in general up 30-50 yuan. Weak demand, increase in the price of coal tar and transport costs three mountain joint squeeze the steel mill profits, at present in the production of rebar and wire rod mills has been a small loss, and profits of hot rolled plate also dropped to 200 yuan/tons.
  
  Margins will be on the formation of a steel mill‘s capacity utilization. This year compared to last year‘s fourth quarter, steel mills obviously improved cash flow, steel mills will not easily outbreak of large-scale centralized production, more likely, along with the weakening demand, steel prices, steel mills continuously reduce production. Supply is passive follow the demand, and therefore difficult to form the effective support of steel price. , and at the same time, the cost of the capital of coal prices to improve the steel price focus may be more effective.