In 2018, China's steel prices rose or fell?
Since this year, iron and steel production capacity to effect more than expected, if furnace, land of steel and other backward production capacity, comprehensive clearing, and the recent Beijing Tianjin and surrounding the "2+26" key city of steel production area into the heating season limit period, the most stringent "suspension order" began full implementation. In this context, what is the price trend of the iron and steel market in 2018?
Due to the production capacity will continue next year, the heating season on the total supply of steel has a certain inhibition, there are a lot of experts and analytical institutions are more optimistic about the price of steel next year. However, the iron and steel industry well-known analyst Zeng Jiesheng believes that 2018 steel market is not optimistic, steel prices decline in space, not that steel prices will exceed 5000 yuan per ton, on the contrary will than the current average price next year low around 5%. "This is reasonable and necessary, but due to a number of uncertainties, next year, the steel market may still be a roller coaster market."
Zeng Jiesheng said: "the heating season led to the decline in demand for iron and steel production, but the supply decreased more significantly, may not significantly callback years ago. If the price of steel is still high, it will be unfavorable for the development of downstream manufacturing and the national economy. The government will probably regulate the steel price through monitoring the price adjustment of big enterprises like the coal industry.
The new supply will pick up quickly after the end of the deadline
Industry analysts have pointed out that, as of now, the production capacity has achieved super expected effect, this is the key factor in the steel market. The day before the national development and Reform Commission Director He Lifeng at a press conference that the nineteen big news center, to excess steel production capacity has exceeded 1.1 tons.
In addition, the industry insiders further indicated that according to the goal of resolving 1.4 million tons of steel capacity in three to five years, the capacity of iron and steel in 2016 and 2017 were all over fulfilled, and the actual capacity of 2018 will be less than 25 million tons. That is to say, the pressure on production capacity next year may be very small, and the steel mill profit is high, next year steel production capacity has a violent increase. However, Zeng Jiesheng told the Economic Observer: from a policy point of view, next year the supply side reform is still not relax, it is difficult to increase the supply of iron and steel."
It is reported that the Department of raw material industry, the Ministry of development and Reform Commission Department of industry related personnel China recently with the iron and Steel Industry Association of the three party consultation, in 2018 the Ministry of industry, development and Reform Commission will effectively promote the iron and steel production capacity to work; establish and improve the market, the rule of law banning "long-term mechanism to prevent the steel", "land of steel a stirring among the dry bones urging all good replacement work; production capacity, the new steel capacity is strictly prohibited.
"But the capacity of the compliance blast furnace, the release of the capacity of the electric furnace and the legal transfer of electricity are also very large. This new iron production capacity of 40 million tons, and the production of electric furnace production capacity is 15 million tons, next year will add 20 million tons of production capacity of 20 million tons of ironmaking and steelmaking capacity. Many of these are gradually starting to start production in the second half of this year, and the new supply is not small next year. Zeng Jiesheng for economic observer said that after the end of production in March next year, the seasonal rebound in demand, but supply is likely to increase rapidly, steel pressure will increase rapidly.
The weakening of demand is a large probability event
Zeng Jiesheng believes that monetary policy may be more relaxed next year by the steering tight, economic growth gradually slowed down, resulting in a steady decline in steel demand is a high probability event.
"We expect that the growth rate of fixed assets investment in 2018 is about 7.2%, which is roughly equal to the growth rate of investment in 2017. Infrastructure investment growth will decline slightly, and manufacturing investment will stabilise. Although upstream is under the pressure of capacity and leverage, corporate profits may mainly be used to repay liabilities rather than for equipment investment, but downstream investment demand may drive overall manufacturing investment to stabilize and stabilize. Zeng Jiesheng said.
In addition, affected by the real estate policy, Zeng Jiesheng is expected next year real estate sales growth rate down to around 1.5%, the growth rate of real estate investment in the bottom, at the bottom of about 4.7%. Real estate investment and infrastructure investment are slow down, and the actual GDP growth rate is expected to slow to 6.6% next year.
"Next year, it is expected that the growth of other steel industry, such as machinery, automobile and household appliances, will also slow down, and the pulling effect of steel will be weakened." Zeng Jiesheng for economic observer said, machinery and infrastructure, real estate related degree is large, with the decline in the growth rate of exports next year and mechanical performance is good, the overall growth rate will be with the same mechanical flat or slightly down. Next year, car purchase tax concessions are cancelled, and the growth of car sales and sales will slow down.
Industry experts believe that this year, the main economic sectors of the world are recovering well. Many countries realize that the policy of excessive quantitative easing to stimulate the economy is too risky to continue.
"Countries to tighten monetary policy in favor of the commodity market, and stimulate the economy through fiscal policy, commodities demand, but the supply of money and commodities are negatively correlated, especially the Fed's monetary policy tightening monetary tightening will have a certain inhibitory effect on global commodity markets." Zeng Jiesheng said.
Exports will be further reduced
According to customs data, China exported 4 million 980 thousand tons of steel in October 2017, down 35.3% compared to the same period last year. In 1-10 months, China exported 64 million 490 thousand tons of steel, down 30.4% compared with the same period last year.
In this year, Zeng Jiesheng opinion, the main reason is the decline in steel exports sharply reduce the difference at home and abroad, many varieties and price upside down, to enable enterprises to export power reduction. Enterprises now have good sales and profit, and do not care about domestic or foreign. It is expected that the domestic steel and market will be better next year, the internal and external price difference is not large, the export power of enterprises is not big, the export of foreign exports is difficult to pick up, and it will fall slightly.
In addition, Zeng Jiesheng said that iron ore prices downside, coal prices next year will be the focus of monitoring the NDRC, prices can not be sustained, down the probability of large, so the raw material cost of steel support will be further weakened.
"Due to the gradual release of the capacity formed by large-scale investment in recent years, Australia, Brazil and other four mines will also increase nearly 50 million tons of capacity next year. It is expected to increase output of 40 million tons of iron ore, while the growth of foreign demand is limited, and most of them will go to China. The supply of domestic scrap is increasing and the supply of iron ore will exceed the demand. The import price of iron ore will further decrease next year. The average price of 62% grade Australian PB powder will be around 58 dollars / ton. Zeng Jiesheng told the economic observer, coal supply growth exceeds demand growth has the same phenomenon.
It is understood that, due to the high electricity price, the downstream power plants are miserable. The NDRC is studying the proper extension of the release period of the advanced capacity, and encourages the coal and electricity enterprises to sign the contract and supervise the implementation. "This series of measures will have a substantial impact on the upward trend of coal prices, while the electric coal and coking coal have a certain substitution effect and interaction effect, which is also not conducive to the rising of coke prices for coking coal." Zeng Jiesheng said.