Looking at the later steel price trend through steel production capacity

In May, for the steel market, it did experience a lot of extraordinary things, but no matter how stimulated the policy news, domestic steel prices have always been on the brink of rising, and they can't get anywhere. The continuous high-yield complications of China's crude steel began to appear in the near future a few months ago. Affected by the rapid decline in steel prices, steel mills are very cautious in production, and they mainly use depletion of inventories, but because the downstream demand has never been improved, so the transaction More limited.

According to the latest data from the China Iron and Steel Industry Association, in the latter half of May, the output of crude steel in major national large and medium-sized steel enterprises was 17.734 million tons, with an average daily output of 1.612 million tons, which was a significant decrease of 4.7% in the end of the decade. It is estimated that the country’s crude steel production in late May will be 21.556 million tons, with an average daily output of 1,959,600 tons, which will be a 3.9% decrease from the previous month. In May, the output of crude steel was continuously reduced. It is reasonable to say that this will have a greater boosting effect on the business mentality. However, at present, the business does not seem to be “cold”. The market analyst of China Steel Spot Net also believes that at present, Under the market conditions, even if the output of crude steel is continuously reduced, it is still difficult to reach the contradiction between the supply and demand of steel in China.

Since May, China's crude steel output has started to fall. Although the amount of decline has not been large, it has given businesses a big boost from the start. What's more, the latest statistics from the customs also show that in May China exported 5.23 million tons of steel, which was the highest monthly export volume in 2012, an increase of 560,000 tons compared with April, and an increase of 9.87% compared with the same period of last year. From January to May, China's total exports of steel were 22.04 million tons, a year-on-year increase of 10.1%, and steel exports were quite optimistic. This can be said to have a greater filling effect than the steel market where domestic demand has always been difficult to expand.

It stands to reason that in the environment where the output of crude steel falls and the steel exports increase, the contradiction between supply and demand in the steel industry in China should be expected to ease. However, the fact does not seem to be the case. Under the stimulation of new policies, China's downstream industries have continued to release demand. However, steel traders are very cautious about the market, their purchase intention is not strong, and there is no incentive to pull up. The current situation of oversupply has always existed, which has led to domestic steel prices. It is difficult to enter the upstream channel. Many people are wondering where the problem lies, and why even if continuous production of crude steel is reduced, it will not be able to solve the contradiction between China's steel supply and demand.

The author believes that this has a certain relationship with China’s continuous increase in imports of iron ore. If you are an attentive merchant, it is estimated that you have discovered that when the steel import and export in China both rise, the amount of iron ore in China is also At the same time it is picking up. For a long time, China's port iron ore is in a high inventory state. According to statistics, as of June 4, China's port iron ore stocks (25 ports along the coast) were 96.62 million tons, although the figure was 0.62 million tons less than the previous reporting period, a drop of 0.64% from the previous period. However, according to a number of large-scale iron ore traders in the port, the current inventory declines slightly, not because the downstream demand picks up, but because the steel mills are restocking, China’s iron ore inventories are hardly drastically reduced.

However, according to customs statistics, when the iron ore market in China was in such an embarrassing situation, the import volume of iron ore in China was rising sharply! According to customs data, in May 2012, China imported 63.84 million tons of iron ore, which was an increase of 6.15 million tons from April, an increase of 19.77% year-on-year and a return of more than 60 million tons. From January to May, it imported 30.82 million tons of iron ore, an increase of 9% year-on-year. In terms of billet, China imported 30,000 tons of billet in May, and imported 160,000 tons of billet from January to May, a year-on-year decrease of 35.2%, and billet exports were zero.

Seeing this set of data, I think we should not doubt it anymore. Although China’s steel exports have risen in May, the amount of iron ore imports is also rising, and it’s again rising by 60 million tons. Such a huge amount of imports. How will it be handled in the future? Needless to say, we also know that it will be slowly digested by the steel mill! 70,000 tons of crude steel daily output and 5 million tons of steel exports, in exchange for 60 million tons of imported iron ore, this price, do you think businesses can be happy? And 60 million tons of iron ore will be converted into more steel production capacity? can not imagine! Therefore, in the future, the contradiction between the supply and demand of steel in China will remain very severe. This is an indisputable fact.