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The characteristics of the steel industry chain are that the upstream iron ore supply is highly concentrated, while the downstream steel production capacity is dispersed. Therefore, the formation of the steel industry is difficult to rise and fall, and the steel price is easy to fall. Since the beginning of this year, steel prices have experienced a sharp rise and fall, people once again saw this logic: in view of the price, the current round of iron ore has increased by 57%, while rebar prices have risen by 29%. To this end, all steel companies have reported that in January-February 2016, steel companies' profits were better than the fourth quarter of 2015, but worse than the same period last year.
But recently, iron ore has fallen sharply. From the perspective of futures prices, yesterday, the main contract of the iron ore of the Dachs closed at 379 yuan / ton during the day, a decrease of 3.44%. Since March 22, the main contract for iron ore has fallen from a high level of 19%. In contrast, threaded and hot rolled coils have maintained a high level of consolidation at around 2,200 yuan and 2,400 yuan since the 21st. The data shows that as of March 25, the Xiben cost index rose by RMB 132/ton from the end of February, much lower than the increase of the steel index of RMB 340/ton over the same period.
Qiu Yuecheng, a senior analyst at Xiben Shinkansen, estimates that the majority of domestic steel companies' profit per ton of steel has reached more than 200 yuan/ton, and the profit level is at the highest level in the past two years.
The rebound in steel prices was mainly due to the start of demand in the peak season. With the temperature rising in March, the construction sites started to work one after another, and the demand for terminals was released. It is reported that the national steel inventories have maintained a decline of nearly 400,000 tons in the past three consecutive weeks, indicating that the terminal demand in the traditional consumption season is performing well. On the other hand, steel mills are slower than expected due to financial difficulties. Statistics show that in January-February, China's crude steel output fell sharply by 5.7% year-on-year, a 3.4 percentage point increase over the previous year; the average daily output of crude steel fell by 2.83% from December last year.
Steel production is at a low level, which is putting pressure on iron ore demand. According to the data of the National Bureau of Statistics, at present, the national crude steel capacity utilization rate is less than 65%.
How long can the steel profitable honeymoon period last? Qiu Yuecheng believes that the key is to see the resumption of production in steel mills. In the case of high profitability, steel mills resumed production, the pace of resumption of production accelerated, steel prices will be suppressed; at the same time, under high profit conditions, the pressure on steel enterprise reform is reduced, which is not conducive to supply-side reform.
On the 28th, the China Iron and Steel Association announced the production of crude steel in mid-March. The data shows that the steel producer Nissan's crude steel has increased by more than 4%.
Ren Zhuqian, head of the “My Steel†steel sector, also said that from the latest monitoring data, the blast furnace operating rate has not rebounded significantly, and the short-term steel mills have not resumed production. However, under the current profit level, some of the pre-discontinued steel mills are still actively resuming production. It is expected that the output will reach the limit in mid-April, which will put pressure on the market trend and the profit status of the steel mill will be adjusted accordingly.
Iron ore once again fell sharply, steel companies ushered in a profit window
Abstract Recently, the prices of steel and iron ore that rebounded to high levels showed a rare steel price stability and a sharp drop in the price of minerals, which brought a rare profit window for Chinese steel companies. The steel industry chain is characterized by a high concentration of upstream iron ore supply, and the downstream steel production capacity is dispersed, thus,...
Recently, the prices of steel and iron ore that rebounded to high levels showed a rare steel price stability and a sharp drop in the price of minerals, which brought a rare profit window for Chinese steel companies.