How will the ex factory price policy of the most p

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How will the ex factory price policy of mainstream steel mills come out in September

2011, the steel price started to set sail again after a green investment cycle of 3-5 years, and the building materials began to accelerate the pace of development after two rounds of rise and fall. Based on the golden autumn, we look forward to the arrival of the traditional peak consumption season. So how will the ex factory price policy of mainstream steel mills come out in September? The following is a brief analysis from five aspects: spot price, steel mill strategy, cost, supply and demand and manufacturer game

I. spot price

first of all, from the overall trend of steel prices, the operating trend of steel prices in the first half of 2011 has the following characteristics: 1. Steel prices are at a relatively high level; 2. The frequency of fluctuation is intensified, and there is no long-term unilateral market (the financial attribute of steel is enhanced. In addition, the cost changes frequently due to the change from the long-term agreement to the spot pricing model of the ore price pricing model); 3. The fluctuation range narrowed

look at the situation of varieties: long wood is obviously stronger than plate, and the trend of each variety shows a differentiation trend. Due to the pulling effect of affordable housing on building materials, building materials have been in a leading position in the first half of 2011. Due to the driving effect of building materials on other varieties, even vulnerable varieties such as cold rolling, medium and heavy plate show no sign of sharp decline

finally, from the performance of the high and low points of each variety in the year: at present, due to the lack of market resources, the wire rod has reached a new high in the year; Rebar also followed, near the high point of the year. Cold rolling, on the other hand, was at a low point due to the impact of the Japanese earthquake

Table 1 Comparison of high and low points of steel varieties in 2011

data source: mri

II. Steel plant strategy

first of all, from the perspective of the ex factory price itself, the steel plant has always pursued the golden rule of rapid rise and slow fall. The market rose, and the steel mills rose, and the increase was not small. The market fell and steel mills waited and saw; The market fell again, and the steel mills continued to wait and see; The market continued to be weak, and steel mills began to consider appropriate reduction. According to the current situation of the spot market, it is still in an upward trend in the medium term, so the steel mill has a greater probability of raising the ex factory price in September

secondly, from the perspective of the ex factory prices of different steel varieties, the recent price adjustment of hot rolled and medium-sized plates is mainly stable and weakening, while the price adjustment of cold rolled and galvanized steel is in a small upward trend, and the color coating is stable

Figure 1 Comparison of hot rolling ex factory price trend figure 2 Comparison of cold rolling ex factory price trend

once again, from the perspective of the current price difference of steel by variety and period, the current price difference between color coating and medium plate is slightly higher than the average price difference; Rebar futures are lower than the spot price, and there is still room for increase; The price difference of hot rolling, cold rolling and galvanizing is lower than the average price difference. In this regard, futures also have some room for rise

Table 2 Comparison of price difference between current and current prices of steel products by variety

data source: mri

III. cost

in terms of raw material prices, at present, the price is basically rising steadily, of which the monthly increase of iron concentrate powder (66%) is the largest, as high as 9.43%. In terms of full cost, the monthly increase of common carbon billet is the largest, with an increase of 82 yuan/ton; Low alloy medium plate followed, and the cost of various varieties showed a steady upward trend

the substantial increase in the cost of raw materials has seriously squeezed the profit margin of the steel plant. In addition to strengthening management and reducing other costs, the steel plant should also consider transferring this part of costs to downstream users at an appropriate time, so as to keep its own upper computer software as the profit of the full digital 3-loop control software developed by the company in 5 years

IV. supply and demand side

1. Supply side: in mid July, the average daily crude steel output was 1.95 million tons, although slightly lower than the previous month, it was still at a high level. CISA estimated that the daily output of crude steel in China reached 1949900 tons in mid July, a month on month decrease of 0.26%. In the first half of the year, the average daily output of crude steel was 1.949 million tons, and the annual output of crude steel reached the 700 million ton level. In the second half of the year, although it is possible to strengthen the policies of eliminating backward production capacity and energy conservation and emission reduction, for steel mills, most varieties are still profitable, especially the construction steel is profitable, and the steel mills are not willing to reduce production. It is expected that the output will remain high in August, so the supply will suppress the further rise of steel prices

2. Demand side: in June, major downstream industries showed signs of stabilization. In the second quarter, real estate investment rose against the trend under the premise of the credit crunch, the growth of second-hand housing expanded, and the growth of new commercial housing prices continued to narrow. In the coming months, the regulatory policy may continue to increase, and the purchase restriction order will gradually expand to the second and third tier cities. The growth rate of commercial housing investment may slow down significantly, but the acceleration of affordable housing construction will hedge the impact of the decline in the growth rate of some commercial housing investment, so the overall real estate investment will not decline significantly. After two months of negative year-on-year growth, the growth rate of automobile production and sales changed from negative to positive in June, and the market is expected to gradually recover in the future. The overall slowdown in the growth rate of household appliance sales, the increase in raw material costs and labor costs caused by inflationary pressure, the slowdown in external demand, the gradual weakening of the stimulus effects of policies such as "household appliances to the countryside" are the main factors leading to the slowdown in the growth rate of household appliance sales in the second quarter. In June, the sales decline of construction machinery stabilized, and the sales decline of excavators and bulldozers decreased compared with that in May. The construction of affordable housing and water conservancy facilities in the second half of the year will effectively stimulate the demand growth of the construction machinery industry. The number of new orders and hand-held orders in the shipbuilding industry continued to decline. The number of completed shipbuilding exceeded the number of new orders received in the same period for six consecutive months. Some enterprises may fall into the dilemma of insufficient construction in the future. Although the demand growth rate of various downstream industries has declined to varying degrees, it is expected to gradually recover in the later stage

3. Inventory: as of August 5, 2011, the total social inventory was 13.88468 million tons, an increase of 31.33 million tons compared with last week, a decrease of 1748600 tons compared with last month, and a decrease of 8.42% compared with the same period last year. In terms of specific varieties, the stocks of rebar, cold rolling and hot rolling increased slightly, while the stocks of wire rod and medium plate still decreased. After reaching a high point in March 2011, social inventory has continued to fall back to near the low point at the beginning of the year, showing that the downstream demand is not as weak as we thought

v. manufacturer's game

according to the early MRI survey results, many traders have given up long-term association at present because the profit space of traders has been greatly squeezed. In particular, for some steel mills with strict implementation of the agreement, in the case of poor export, weak domestic demand, weak desire of steel mills to reduce production, and no obvious momentum of price increase, in order to stabilize sales, some varieties of some steel mills in September may be returned to a large number of traders in the form of flat price or compensation. While steel mills with relatively loose agreements have to consider price increases due to cost constraints, and are about to usher in the traditional peak season of "golden nine and silver ten", considering that the overall steel price amplitude has narrowed this year and there is no substantial preparation in the downstream, the increase may be very limited

VI. conclusion

although the current spot market price is driven by long-term materials, it shows little performance, but after the price rises, there is no market, the transaction is not smooth, and the rise is weak, and it may face a small adjustment in the short term. From the perspective of steel plant strategy, although the spot market is facing adjustment in the short term, the ex factory price in September may still be stable and rising. In addition, in terms of cost, steel mills also have sufficient reasons to pass on the accumulated pressure of high priced raw materials in the early stage. From the perspective of supply and demand, although the supply is still at a high level, the demand shows signs of stabilizing, which is expected to further warm up in the later period, supporting the upward movement of steel prices. Inventory has also fallen to the low point of the year, indicating that downstream demand is not as weak as we thought. From the perspective of manufacturer game, although steel mills have reasons for price increase, considering the acceptance of traders and downstream, the increase is limited. To sum up, we believe that the ex factory prices of mainstream steel mills will increase slightly in September. In terms of varieties, the growth rate of the medium plate is about yuan/ton; Hot rolling, cold rolling and galvanizing increased by about yuan; The color coating may remain stable. In addition, the price of Shagang building materials will be adjusted in the middle of the year, or it will still be mainly increased by about yuan/ton

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