Steel prices rebounded slightly in November

In the past week, domestic steel market prices rebounded. As of November 5, the average price of Ñ„20mmHRB400 rebar in major cities nationwide was RMB 3,545/t, which was RMB 40/t higher than that of October 29; the average price of 4.75mm HRC was RMB 3,545/t, and 10 On the 29th of the month, the price rose by 25 yuan/ton; the cold-rolled coils had an increase of 5 yuan/ton; the plate prices remained the same as the previous week.

The trend of industrial economy is picking up. According to statistics from the National Bureau of Statistics, from January to September, the total profits of industrial enterprises above designated size increased by 13.5% year-on-year, an increase of 0.7 percentage points from January to August. Among them, profit from main activities increased by 5.3% year-on-year, and the growth rate increased by 0.4% from January to August. This shows that the industrial economy has gradually shown a warming trend and will help increase the manufacturing enthusiasm of the manufacturing industry.

At the same time, China's manufacturing PMI (Purchasing Managers Index) released on November 1 was 51.4%, up 0.3% from the previous quarter and rebounded for four consecutive months, hitting a new high in nearly 18 months, indicating that the manufacturing sector continued to pick up. Potential. However, from the sub-indexes, the new orders index, finished goods inventory index, purchase price index have declined, indicating that companies are still cautious about future market prospects.

With respect to funds, in the context of the international investment banks sing to empty China, the collective outflow of hot money since the beginning of the year, coupled with the macroeconomic policies affecting the structure of domestic adjustments, the “shortage of money” occurred in China’s banks during the year and the interest rate on short-term funds soared. This also led to the end of the quarter, the end of the month, the market's concerns about funding tensions have not stopped. However, judging from the data released by the Central Bank, China’s occupancies in September witnessed a substantial increase, with a surge of 268.205 billion yuan, indicating that the outflow of hot money has been curbed and there has been a recurrence. In addition, the Fed’s reduction of QE (quantitative easing) operation was delayed again, and the negative impact caused by the capital market was also substantially released. The situation of tight funding has improved. At the same time, the large increase in ** expenditure has also increased the pressure on base currency delivery. In order to control liquidity, the central bank suspended the repurchase operation, resulting in a sharp rise in the money market rate at the end of October. Although the central bank has resumed liquidity placement in the previous week, it still maintains a tight monetary policy in light of inflationary pressures. It is expected that the financial pressure on the market in the later period will remain high.

On the external front, in October, the US ISM (Supply Management Association) manufacturing index was 56.4 points, the highest since April 2011; during the same period, the eurozone manufacturing PMI rose to 51.3%. This shows that the European and American economies have continued to recover.

Supply pressure is expected to decrease. While the economic environment at home and abroad has improved, the supply and demand contradictions of the steel industry have not significantly improved, but from the current situation, the supply pressure in the latter period is expected to decrease.

From the perspective of steel mills, since October, with the reduction of the ex-factory price of steel mills and spot steel prices, the profitability of steel mills has decreased or even increased. The production enthusiasm has weakened, and the output of crude steel has continuously declined. According to the latest data from the China Iron and Steel Association, in mid-October, the average daily output of crude steel of the steel association members was 1,711,700 tons, which was a decrease of 2.97% from the previous month; the estimated daily average daily output was 1,106,800 tons, a decrease of 1% from the previous month and both fell to The low of the X-day since August.

According to a related person from the Hebei Provincial Department of Industry and Information Technology, as of October 31, the relevant equipment of the 190 companies that were included in this year's Hebei Province's industrial industry to eliminate backward production capacity have all been shut down and dismantled. Among them, the phase-out production capacity of 1.3 million tons of iron and steel production capacity of 1.081 million tons were eliminated, which were 162% and 540.5% of the country's assigned tasks.

According to the practice of previous years, the fourth quarter was the season for centralized maintenance of steel plants. In addition, the current serious air pollution in the Beijing-Tianjin-Hebei region, local governments’ emphasis on environmental protection began to increase, and the local government may introduce phase-inhibition measures to limit production and production. The impact of weather conditions on the start-up of steel mills will increase. The newly released October PMI index for the national steel industry showed that the steel industry production index was 48.5%, which was 4.5 percentage points lower than that in September. After undergoing a continuous rise in the first two months and continuing to expand for three consecutive months, it returned to the contraction range. At the same time, production-related procurement activities are also shrinking. In October, the purchase volume index fell by 3.2 percentage points to 52.7%; the raw materials inventory index was 48.5%. Although it rebounded by 5.4 percentage points, it was still within the contraction range. Judging from the changes in the three indices, the output of steel in the later period tends to fall, and the domestic crude steel supply pressure will decrease.

In addition, with the decline in steel prices, the current price of steel is nearly 200 yuan/ton, which is close to the cost price of steel mills. In fact, in the process of continuous decline in steel prices, due to errors in raw material inventory and finished product inventory, the actual losses of steel mills are much larger than real-time production profits and losses. According to historical data, when the price is upside down to 300 yuan/ton, the cash income of steel mills will be negative, which means that the utilization rate of blast furnaces will drop soon. From the recent data of Tangshan Steel Enterprises, it can be seen that the operating rate of blast furnaces remained at 93%, which was a drop from the middle of October. This also means that the supply in the later period will be reduced and it will become a major advantage in supporting steel prices.

However, it is worth noting that in the PMI sub-index of Hebei Province's steel industry, the new order index and the new export order index both fell. Among them, the new orders index was 40.7%, a decrease of 0.2 percentage points; the new export orders index was 40.9%, a decrease of 4.9 percentage points. This shows that at the same time when the steel mills are not shipping smoothly, foreign demand is also declining.

The prices of main raw materials rose steadily, and the prices of major raw materials rose steadily. There was no significant change in the pace of procurement of steel plants.

The price of imported ore surged and the price of domestic ore remained flat. As of November 5, 62.5% grade Qingdao New Port fines offer 930 yuan / ton, compared with the same period the previous week rose 10 yuan / ton; Hebei Qian'an area 66% grade of fine iron powder offer 1050 yuan / ton , the same as the previous week. As the tender price of Newman fines increased, the enthusiasm of the market inquiry offer increased. The spot market is relatively stable and the change in port inventory has increased. As of November 1, the major mines in the country's major ports had 74.43 million tons of imported ore inventories, an increase of 1,322,000 tons compared with the previous week. In terms of domestic mines, the purchase of steel mills is not active, and many merchants take a wait-and-see attitude. Market transactions are generally low.

The metallurgical coke market is operating steadily. As of November 5, the first-grade metallurgical coke in Changzhi, Shanxi Province was quoted at 1,380 yuan/ton, which was the same as the previous week. After the coke prices in the northern market had risen to varying degrees in the previous week, the price of coke enterprises in some parts of Eastern China this week also rose by 20 yuan/ton to 30 yuan/ton, with no significant changes in the central and southern regions. It is expected that the coke market will remain stable in the later period, and it will be difficult to increase sharply in the short term.

Market sentiment improved slightly Recently, under the support of many factors, such as low inventory levels, rising billet prices, continued rebar resilience, and strong expectations for environmental governance in North China, the domestic construction steel market has improved somewhat. Beijing, Shanghai, etc. The prices and shipments in the mainstream market have obviously improved, especially in the Beijing market.

According to statistics from industry organizations, the turnover of the major construction steel traders in Beijing in the latest week was 23,700 tons, 25,800 tons, 26,400 tons, 24,600 tons, and 24,200 tons, respectively, and the average daily transaction volume has increased by more than 4,700 compared with the previous week. Ton.

In this situation, the market mentality has improved. However, businessmen believe that the continued rebound in prices remains to be observed in the latest situation, because after all, the weather is getting cold, the off-season is approaching, the lack of demand for price support.

To sum up, the environmental protection measures or overweighting in individual cities, steel mills or intensifying efforts to reduce production, and the decline in market supply in the later period are high probability events. In addition, with the convening of the Third Plenary Session of the 18th CPC Central Committee, it will bring about certain positive expectations for the market. It is expected that domestic steel prices will rebound slightly in November.