After entering the threshold of 2011, the domestic steel price ushered in a good start: the market price of leading steel products rose slightly daily, and the ex-factory prices of steel mills immediately followed their intention to block prices at any time. From the trend of market prices for hot coils and wire coils in the Shanghai market, it can be seen that the 5.5-meter specification has risen from 4,510 yuan/ton on January 4 to 4,640 yuan/ton on January 14, an increase of 130 yuan/ton. The price of secondary rebar, which had dropped back at the end of last year, also rose by RMB 80/ton from the same period to RMB 4,600/ton from 4,520 yuan/ton. Baosteel, the steel maker, Tuesday raised the order price for most of its plates in February by 100 yuan, and then the steel mills placed the stance of your singing on the stage. The factory prices all followed up. However, the “red fire†in the steel market does not hide the contradictions behind it. We believe that the following contradictory changes may become an important factor affecting changes in the price trend in the later steel market.
The first is the contradiction between the stability of monetary policy return and the excess liquidity in the short term. In recent years, China’s monetary policy has changed from a tight-loose-robust way, and the steel market price has experienced several ups and downs in this process. The tightened monetary policy implemented by the central bank in the fourth quarter of 2007 was mainly to curb inflation and prevent overheated economic growth; during this period, the steel market price experienced a long-term, low-price operation, and the Shanghai market (same below) The price of 5.5mm size hot rolled coils is long below 4,000 yuan/ton. The impact of the mid-year financial crisis in 2008 has deepened, the central bank adjusted its monetary policy in a timely manner, increased the annual target for new ** growth, and directed financial institutions to increase credit aggregates; steel market prices have risen sharply in the first half of 2008. The market price of the 5.5-mm specification was once close to 6,000 yuan / ton, reaching a historical peak.
However, with the deepening of the financial crisis, domestic steel prices have also been declining all the way. The prices of 5.5mm specifications have dropped to less than 3,000 yuan/ton at the end of 2008. In response to the crisis, the central bank began to implement a moderately loose monetary policy. The monetary policy was effectively conducted in the market. At the end of 2008, steel prices began to rise from the bottom and hovered above Yang. In the second quarter of 2010, under the easing of monetary easing, steel prices rose to the peak of the current round. The price of 5.5-mm-size prototypes once again reached and exceeded 4,500 yuan per ton. Although it fell afterwards, the prices ended at the end of the year in the red market.
However, on December 3, 2010, the Politburo meeting released important information: Monetary policy in 2011 was adjusted from “pretty loose†to “steadyâ€. This is a major shift in the tone of monetary policy; the steel industry is a capital-intensive industry. One of the changes in monetary policy will undoubtedly affect its market operations to a great extent, especially affecting changes in market prices. The tightening of monetary policy will become one of the factors that restrain the rise of steel prices. However, the loose monetary policy lasting more than two years has led to the current liquidity of the market, although the monetary policy has turned but the short-term liquidity recovery is more difficult and will To a large extent, it supports the continued rise of steel prices. Therefore, the late steel market had to operate under the contradictory state of “monetary policy is returning steadily and liquidity is still excessive in the short termâ€, and the steel price rise process has therefore been accompanied by the “caution†and “cautious and careful†ambivalence. , ready to adjust the direction at any time.
Secondly, the contradiction between the expected growth of crude steel production and the short-term market inventory maintenance contradiction The re-rising of steel prices in the fourth quarter of 2010 is closely related to the decline of steel production. From the figure below, the monthly output of crude steel and the stock of the steel market at the end of the second month are inextricably linked. The trend can be seen: Since May 2010, crude steel production has been declining from month to month, and it has not started to rebound until October; while the end of the steel market's ending stocks also reached a peak in February 2010 and continued to fall and remain low. The situation. The continuous decline in crude steel production has largely affected the continuous low level of market inventories in the second half of 2010, and the decline in inventories also constitutes one of the factors supporting steel prices.
However, the decline in crude steel production in the second half of 2010 was largely influenced by such policies as energy conservation and emission reduction, and its impact has ended with the completion of the “Eleventh Five-Year†energy-saving and emission reduction tasks. Even if “energy saving and emission reduction†is still one of the key points during the 12th Five-Year Plan period, the possibility of energy-saving and emission-reduction policies using administrative orders such as mandatory power cuts as in the beginning of the third quarter of 2010 is no longer significant. The low rise in production will be inevitable. In fact, from figure 2 below, it can be seen that crude domestic crude steel production has rebounded since October 2010. Since the decline in crude steel production can affect the decline in market stocks, the recovery in crude steel production will also bring about a market consolidation. The recovery of volume, but this effect has a certain lag, taking into account the new resources to enter the market cycle can reach a month or even more than a month and a half, then the short-term situation of the steel market inventory will continue in the short term.
Under the premise that the “major surplus of crude steel production capacity†can not be changed, the continuous increase of crude steel production will bring about the possibility of market price decline. Under this rule, the current domestic crude steel output continues to rise for the sustained price. The rising steel market laid a hidden danger. The continuous low level of market inventories is a good support for the rise of steel prices and the expectation of continued rise in the future. Therefore, the expected growth of crude steel production and the persistently low market inventory have become the psychological contradiction between market mentality and future expectations. . However, this contradiction only exists in stages. In fact, as the output of crude steel continues to rise, the stock of the market has started to rise from the low level. However, the small increase in stocks will not be able to reverse the current low inventory of the steel market. We can see from the trend of the sample survey of the steel market weekly stocks in Figure 3 below that steel stocks inventories have been slowly picking up since the end of 2010. We expect the “inventory low†to continue to play a leading role in the short-to-short term conflict between “expected rebound of crude steel production and continued low market inventories†and support the continued rise in prices. In particular, the forthcoming “Spring Festival†will affect the transfer of steel products from steel mills to the market for a long time in the future, resulting in a long period of time for low stocks; however, as the steel output continues to increase in the later period, stocks The low level will gradually turn into a high inventory, and it will once again become one of the important factors in restraining the price increase.
Finally, the contradiction between the long-term stable growth of downstream demand and the short-term periodic fall Although the monetary policy has returned to a stable, but in order to maintain economic growth and adjust the economic structure, the fiscal policy will continue to maintain a moderate expansion in the future, this is the 2011 economy. The stable growth provided certain support, so we are still optimistic about the demand for steel used in the main downstream steel industry in 2011. Luo Bingsheng, executive vice president of the China Iron and Steel Association, pointed out that considering the implementation of the national strategy for expanding domestic demand, especially consumer demand, in 2011, consumption, investment, and export coordination will drive economic growth; investment will continue to grow at a reasonable pace, focusing on optimizing the investment structure. In this case, if the fixed assets investment in the whole society will maintain a growth rate of around 20% in 2011, the apparent consumption of crude steel in the domestic market will maintain a modest increase in 2011, and the total domestic crude steel demand will be higher than the total in 2010. Annual increase of 40 million tons - 50 million tons. China United Iron & Steel Network conducted research on the amount of steel used in the main downstream steel industry and on this basis forecasted the amount of steel used by some industries in 2011, of which steel for the construction industry will reach 276 million tons and railway steel will remain at 23 million. Around tons, the steel consumption for automobiles, shipbuilding and household appliances were 39 million tons, 19 million tons and 8.8 million tons, respectively, which were higher than the amount of steel used in 2010. This laid the foundation for the relatively high prices of steel products in 2011.
However, the steel demand of downstream users in the short term may be in a phased downward trend. On the one hand, many downstream steel companies will stop working and letting off during the Spring Festival to reduce demand; on the other hand, many downstream users in the process of early price increase have already Procurement of a portion of spare demand does not require repurchasing in the short term; gradually rising steel prices will, to a certain extent, inhibit some downstream users from reducing purchases and reserves, and the above factors will form a joint force that will inhibit downstream demand from falling down gradually. It has become one of the factors that inhibit the rise of steel prices. Therefore, we have listed “long-term stable growth of downstream demand and short-term, phased fall†as another important contradiction affecting the steel industry in the later period; this contradiction will play a leading role in the short-term and will be a phased drop in demand.
By analyzing the above-mentioned major contradictions in the current steel market, we find that short-term excess liquidity and low inventory levels will be the factors that support the increase in steel market prices. However, the fall in phased purchase demand will inhibit the excessive increase in market prices. In the long term, the stable growth in downstream steel industry demand will support domestic steel prices in 2011 at a relatively high level, but gradually increasing stocks and future expected decreases in liquidity will effectively contain the height of steel prices. Because we believe that in the absence of other unexpected factors, the steel price that continues to rise at the current price may continue for some time before the Spring Festival and even after the Spring Festival. However, the price increase trend in the middle and later quarters of the first quarter may undergo periodical changes.
The first is the contradiction between the stability of monetary policy return and the excess liquidity in the short term. In recent years, China’s monetary policy has changed from a tight-loose-robust way, and the steel market price has experienced several ups and downs in this process. The tightened monetary policy implemented by the central bank in the fourth quarter of 2007 was mainly to curb inflation and prevent overheated economic growth; during this period, the steel market price experienced a long-term, low-price operation, and the Shanghai market (same below) The price of 5.5mm size hot rolled coils is long below 4,000 yuan/ton. The impact of the mid-year financial crisis in 2008 has deepened, the central bank adjusted its monetary policy in a timely manner, increased the annual target for new ** growth, and directed financial institutions to increase credit aggregates; steel market prices have risen sharply in the first half of 2008. The market price of the 5.5-mm specification was once close to 6,000 yuan / ton, reaching a historical peak.
However, with the deepening of the financial crisis, domestic steel prices have also been declining all the way. The prices of 5.5mm specifications have dropped to less than 3,000 yuan/ton at the end of 2008. In response to the crisis, the central bank began to implement a moderately loose monetary policy. The monetary policy was effectively conducted in the market. At the end of 2008, steel prices began to rise from the bottom and hovered above Yang. In the second quarter of 2010, under the easing of monetary easing, steel prices rose to the peak of the current round. The price of 5.5-mm-size prototypes once again reached and exceeded 4,500 yuan per ton. Although it fell afterwards, the prices ended at the end of the year in the red market.
However, on December 3, 2010, the Politburo meeting released important information: Monetary policy in 2011 was adjusted from “pretty loose†to “steadyâ€. This is a major shift in the tone of monetary policy; the steel industry is a capital-intensive industry. One of the changes in monetary policy will undoubtedly affect its market operations to a great extent, especially affecting changes in market prices. The tightening of monetary policy will become one of the factors that restrain the rise of steel prices. However, the loose monetary policy lasting more than two years has led to the current liquidity of the market, although the monetary policy has turned but the short-term liquidity recovery is more difficult and will To a large extent, it supports the continued rise of steel prices. Therefore, the late steel market had to operate under the contradictory state of “monetary policy is returning steadily and liquidity is still excessive in the short termâ€, and the steel price rise process has therefore been accompanied by the “caution†and “cautious and careful†ambivalence. , ready to adjust the direction at any time.
Secondly, the contradiction between the expected growth of crude steel production and the short-term market inventory maintenance contradiction The re-rising of steel prices in the fourth quarter of 2010 is closely related to the decline of steel production. From the figure below, the monthly output of crude steel and the stock of the steel market at the end of the second month are inextricably linked. The trend can be seen: Since May 2010, crude steel production has been declining from month to month, and it has not started to rebound until October; while the end of the steel market's ending stocks also reached a peak in February 2010 and continued to fall and remain low. The situation. The continuous decline in crude steel production has largely affected the continuous low level of market inventories in the second half of 2010, and the decline in inventories also constitutes one of the factors supporting steel prices.
However, the decline in crude steel production in the second half of 2010 was largely influenced by such policies as energy conservation and emission reduction, and its impact has ended with the completion of the “Eleventh Five-Year†energy-saving and emission reduction tasks. Even if “energy saving and emission reduction†is still one of the key points during the 12th Five-Year Plan period, the possibility of energy-saving and emission-reduction policies using administrative orders such as mandatory power cuts as in the beginning of the third quarter of 2010 is no longer significant. The low rise in production will be inevitable. In fact, from figure 2 below, it can be seen that crude domestic crude steel production has rebounded since October 2010. Since the decline in crude steel production can affect the decline in market stocks, the recovery in crude steel production will also bring about a market consolidation. The recovery of volume, but this effect has a certain lag, taking into account the new resources to enter the market cycle can reach a month or even more than a month and a half, then the short-term situation of the steel market inventory will continue in the short term.
Under the premise that the “major surplus of crude steel production capacity†can not be changed, the continuous increase of crude steel production will bring about the possibility of market price decline. Under this rule, the current domestic crude steel output continues to rise for the sustained price. The rising steel market laid a hidden danger. The continuous low level of market inventories is a good support for the rise of steel prices and the expectation of continued rise in the future. Therefore, the expected growth of crude steel production and the persistently low market inventory have become the psychological contradiction between market mentality and future expectations. . However, this contradiction only exists in stages. In fact, as the output of crude steel continues to rise, the stock of the market has started to rise from the low level. However, the small increase in stocks will not be able to reverse the current low inventory of the steel market. We can see from the trend of the sample survey of the steel market weekly stocks in Figure 3 below that steel stocks inventories have been slowly picking up since the end of 2010. We expect the “inventory low†to continue to play a leading role in the short-to-short term conflict between “expected rebound of crude steel production and continued low market inventories†and support the continued rise in prices. In particular, the forthcoming “Spring Festival†will affect the transfer of steel products from steel mills to the market for a long time in the future, resulting in a long period of time for low stocks; however, as the steel output continues to increase in the later period, stocks The low level will gradually turn into a high inventory, and it will once again become one of the important factors in restraining the price increase.
Finally, the contradiction between the long-term stable growth of downstream demand and the short-term periodic fall Although the monetary policy has returned to a stable, but in order to maintain economic growth and adjust the economic structure, the fiscal policy will continue to maintain a moderate expansion in the future, this is the 2011 economy. The stable growth provided certain support, so we are still optimistic about the demand for steel used in the main downstream steel industry in 2011. Luo Bingsheng, executive vice president of the China Iron and Steel Association, pointed out that considering the implementation of the national strategy for expanding domestic demand, especially consumer demand, in 2011, consumption, investment, and export coordination will drive economic growth; investment will continue to grow at a reasonable pace, focusing on optimizing the investment structure. In this case, if the fixed assets investment in the whole society will maintain a growth rate of around 20% in 2011, the apparent consumption of crude steel in the domestic market will maintain a modest increase in 2011, and the total domestic crude steel demand will be higher than the total in 2010. Annual increase of 40 million tons - 50 million tons. China United Iron & Steel Network conducted research on the amount of steel used in the main downstream steel industry and on this basis forecasted the amount of steel used by some industries in 2011, of which steel for the construction industry will reach 276 million tons and railway steel will remain at 23 million. Around tons, the steel consumption for automobiles, shipbuilding and household appliances were 39 million tons, 19 million tons and 8.8 million tons, respectively, which were higher than the amount of steel used in 2010. This laid the foundation for the relatively high prices of steel products in 2011.
However, the steel demand of downstream users in the short term may be in a phased downward trend. On the one hand, many downstream steel companies will stop working and letting off during the Spring Festival to reduce demand; on the other hand, many downstream users in the process of early price increase have already Procurement of a portion of spare demand does not require repurchasing in the short term; gradually rising steel prices will, to a certain extent, inhibit some downstream users from reducing purchases and reserves, and the above factors will form a joint force that will inhibit downstream demand from falling down gradually. It has become one of the factors that inhibit the rise of steel prices. Therefore, we have listed “long-term stable growth of downstream demand and short-term, phased fall†as another important contradiction affecting the steel industry in the later period; this contradiction will play a leading role in the short-term and will be a phased drop in demand.
By analyzing the above-mentioned major contradictions in the current steel market, we find that short-term excess liquidity and low inventory levels will be the factors that support the increase in steel market prices. However, the fall in phased purchase demand will inhibit the excessive increase in market prices. In the long term, the stable growth in downstream steel industry demand will support domestic steel prices in 2011 at a relatively high level, but gradually increasing stocks and future expected decreases in liquidity will effectively contain the height of steel prices. Because we believe that in the absence of other unexpected factors, the steel price that continues to rise at the current price may continue for some time before the Spring Festival and even after the Spring Festival. However, the price increase trend in the middle and later quarters of the first quarter may undergo periodical changes.