According to a summary provided by Platts Steel Chinese sentiment index, the domestic orders after the Spring Festival is expected to improve, the prospects for Chinese steel market next month is expected to be greatly improved. The Platts CSSI index for March was 72.2 points (up to 100 points...
According to the China Steel Emotion Index provided by Platts, the outlook for the Chinese steel market is expected to improve significantly next month due to the expected good domestic orders after the Spring Festival. The Platts CSSI index for March was 72.2 points (maximum of 100 points, greater than 50 indicates a rise in expectations; less than 50 indicates a downside expectation). The March index jumped 63.4 points from the record low of 8.8 in February, the highest since April last year. In this regard, Platts related sources said: "The steel industry rebounded after the Spring Festival, the market sentiment was originally normal, but due to the continued decline in orders in previous months, coupled with the Chinese steel market was not very active, so this year The rebound is even more pronounced. Although new orders are expected to improve significantly, the market's pessimism about exports continues, and high steel inventories may also curb steel prices back to their original levels."
It can be seen that the recovery of the steel industry after the year is probably only a short-lived one. However, this is a rare achievement for the current steel industry. With the actual start of the terminal demand in March, the market inventory will gradually be digested, and the current price falls below 60 US dollars. The price of steel has led to a drop in the cost of steel, so the profitability of steel companies is expected to pick up in March.
In this regard, Lange Steel Network analyst Zhang Lin said in an interview with the "Securities Daily" reporter that after entering March, due to climate reasons, steel prices will maintain a stable state compared to the previous trend, "this time said The steel price rebound is too early, at best it can only be maintained in a stable range, because domestic steel stocks have been increasing since entering 2015, and it has been growing for 8 consecutive weeks. Under the pressure of high stocks, even entering In the traditional peak season, steel prices are also difficult to find a stable support point. For steel companies, they can only 'digest and digest one side'.
Steel prices are hard to find support
Since the implementation of the "Environmental Protection Law" since January 1 this year, for the steel industry, the cost of environmental protection has further increased, and the living environment of steel companies has become more difficult. Under such a living environment, domestic steel production capacity has also slowed down, according to international According to the Steel Association, China's crude steel output in January was 65.5 million tons, down 4.7% year-on-year. Although the statistics of the International Steel Association and the National Bureau of Statistics data are different, and considering the steel demand and the Spring Festival holiday factors, steel production falls back to reasonable. However, what makes the steel industry slightly embarrassing is that the key steel companies in the China Iron and Steel Association in February have a large decline in the daily crude steel output, but the steel products finished goods inventory has increased significantly.
Zhang Lin explained that “Before the Spring Festival, some steel mills were in a state of reduced production and maintenance, and the output declined. However, due to the Spring Festival, the steel mills’ shipments decreased, resulting in an increase in inventory.â€
The statistics of China Steel Association show that the key large and medium-sized enterprises have a daily output of 1.631 million tons in the middle of February, which is 147,000 tons less than the average daily output (1.778 million tons) in January. The stock of steel for key large and medium-sized enterprises is 16.467 million tons. At the end of the month, it increased by 1.70 million tons, an increase of 11.5%. With the gradual recovery of demand in March, the transaction has improved, and it is expected that the inventory of steel enterprises will fall back.
However, some insiders also told reporters that although domestic steel companies have ushered in a peak season of demand growth in March, under the pressure of excessive production capacity and inventory pressure, domestic steel companies are almost ready to digest inventories. To the extent that “the low-cost offensive of Chinese steel companies has even been sold by Japanese steel traders at no cost, it can be seen that domestic steel companies are already cutting their meat in order to expand sales, and the domestic steel market is highly competitive. Steel companies are desperately looking for sales abroad, and orders are available."
The result of such a sale is that steel prices are still hard to find support. The data shows that the national steel composite price index was 103.6 last month, down 1.5% from the end of January.
"The support point of steel price is the digesting speed of steel at home and abroad. Now the price of iron ore still has a downward trend. It has fallen below 60 US dollars, and the cost of steel is relatively low. Therefore, the profit of steel enterprises has a good expectation in the future. However, since domestic steel exports are too 'quick and quick,' they will be easily boycotted by overseas steel companies in the future," Zhang Lin said.
Expanding domestic demand is still king
After China became the net exporter of steel for the first time last year, the speed of China's steel exports has not slowed down this year. Data show that China's steel exports in January 2015 once again set a record high. Customs statistics show that China's steel exports in January reached 10.29 million tons, an increase of 120,000 tons from the previous month, an increase of 1.2% from the previous month and an increase of 52.1%. Compared with exports, China imported 1.15 million tons of steel in January, a decrease of 60,000 tons from the previous month, a decrease of 5.1% from the previous month and a decrease of 15.1% from the same period last year.
Since 2014, due to the sharp increase in China's steel exports, other countries have increased the number of trade sanctions against China's related steel products. In February this year, after Malaysia imposed an anti-dumping duty of 2.49%-12.19% and 15.62% on China's hot rolled coil, checkered coil and pickled oil coil, Thailand also applied its unpainted aluminum to China. The anti-dumping duty rate of zinc steel increased from 2.86%-26.22% in February 2013 to 29.5%. The situation that China's steel industry has been restricted by trade protectionism in other countries in 2015 is still not optimistic. It is expected that steel exports will fall back in March.
However, in Zhang Lin’s view, the steel industry does not need to worry too much about this. “Domestic steel exports are suppressed by foreign trade protectionism. This is not the first time for domestic steel companies, but domestic steel has a price advantage abroad. I can't find a buyer."
Zhang Lin also said that export restrictions can not be used as an excuse for steel companies to digest capacity. "Export is a carriage that drives steel consumption, but the export of steel is still only a minority compared with the domestic steel production capacity. It is unrealistic to expect exports, and expanding domestic demand is king."
The reporter learned that the National Development and Reform Commission has intensively approved a large number of infrastructure investment projects since the fourth quarter of 2014, with a total investment of several trillion yuan. The government work report also proposed to increase the effective investment of public goods and launch a number of new major projects.
Among them: railway investment should be maintained at more than 800 billion yuan; 57 projects that have started construction of major water conservancy projects should be speeded up, and 27 projects will be started this year. The investment in major water conservancy projects under construction will exceed 800 billion yuan; And the renovation of urban and rural dilapidated buildings. This year, the new arrangements for affordable housing projects will be 7.4 million units, and the renovation of rural dilapidated houses will be 3.66 million. This will also result in more release of huge domestic steel demand.
"Although there are favorable policies, it is still unknown when it can be implemented in the steel industry. It is not known which steel company can get the cake. It is afraid that some steel enterprises will not be able to get through that day." The reporter said frankly.
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