For China’s steel industry, the steel market downturn in the first half of 2012 continued, with only a short-term rebound in mid-April; then there was a sideways consolidation in early June, but it also lost price due to weak demand. Rushing power. On the whole, China's steel industry in the first half of the year, steel companies continued to lose money, steel prices tend to fall but difficult to rise, and the support for raw material costs has significantly weakened. The time has come to the second half of the year. Analysts pointed out that a series of national investment plans and signs of a right turn in the real estate industry indicate that future steel price trends may show an inverted "U"-shaped development under the phased release of demand.
Seasonal demand lows from July to August, steel prices are more likely to bottom out
Although the trend of steel prices at work is basically in line with the same period in 2011, the market’s expected target for June has changed; from 2011’s optimistic about the demand for steel from affordable housing projects to a optimistic about the country’s new Driven by a round of economic stimulus plan, it is a pity that the steel price in June basically closed at a low level and did not realize the expected market; this casts a negative shadow on the steel market, which is positive for the later period. Factors may be further bearish.
At present, the summer high temperature is officially entered, and East China, Central China, and South China are generally hot. As a result, the progress of outdoor projects with the largest use of steel has to be reduced, which makes the already weak steel demand fundamentals even worse. Without demand support, steel prices are more likely to fall than rise as a whole. However, at the same time, several factors will also check and balance the room for steel prices to fall sharply; one is that the euro zone debt crisis has temporarily received favorable support, and the global financial market and commodity market prices have stabilized; the second is iron ore, The prices of raw materials such as steel billets continue to be strong, and the possibility of a sharp fall again in the short term is unlikely; that is to say, the steel price is around 4,000 yuan to obtain strong rigid support in terms of cost; third is that steel mills continue to maintain high productivity , But the weak decline in output will inevitably become a trend. Later, steel mills cut prices and cleared the main direction of internal ultra-high inventories. From this point of view, we believe that at the end of July to August, steel prices as a whole should continue to follow the line of shocks and bottoming. There may be repetitions during the period, but the range can be maintained at around 70 yuan.
Demand release accelerated from September to October, steel prices ushered in a phased rebound
This season was originally the "golden, nine, and silver, ten" markets of the traditional steel market; the steel market will experience an inertial pull-up. Although in the same period of 2011, due to the failure of the security housing market, the “Golden Nine Silver Ten” became the “Copper Nine Iron Ten”. In October 2011, steel prices and ore prices plummeted; but the fundamental reason is that the previous market’s guarantees The real estate market is expected to be too large, and steel traders and steel mills are irrational in gambling the peak season of steel prices. In 2012, this "perceptual competition" will definitely be minimized.
During this time period, a series of policies and favorable expectations will be concentrated into actual steel demand for release; among them, a series of major project investment in the early June should enter the construction phase; at the same time, the planned 18 million units in 2012 The amount of social housing projects completed before was relatively small; the time period for local governments to catch up with the construction deadline has come, and the speed of construction has to be increased; in addition, the commercial housing development wave that has been suppressed for a year may come again; The big positive stimulus for China's rigid housing demand has to be released in advance. Although the commercial housing is still in the destocking stage, the increased capital return and the substantial easing of funds have made real estate companies unable to bear loneliness.
More importantly, the level of funding that has been restricting downstream industries' efforts has been further loosened; since the central bank cut interest rates on June 8, starting on July 6, less than a month later, the central bank once again implemented asymmetric interest rate cuts, including deposit rates. A reduction of 25 basis points and a 31 basis point reduction in loan interest rates; from the side, China’s economic trend in June was far lower than expected; the country’s intention to stimulate loan demand for various industries is very obvious; in this way, the various investments mentioned above, Project financing will get a more relaxed environment; the possibility of unable to start or delay in start due to shortage of funds is greatly reduced. In addition, the country recently issued the Twelfth Five-Year Plan for Domestic Trade, indicating practical actions to further expand domestic demand. Looking at it this way, from September to the end of October; the trend of steel prices will inevitably usher in a better fundamental environment and loose support from the external market. The possibility of an increase is very high, and once there is a demand to support the increase, the author is worried about depressing for several months. There has been a retaliatory surge in the steel market for a long time, and the market needs to be cautious.
After the end of November, it may enter the downward adjustment stage again due to the sharp decline in demand
After the possible surge in steel prices in the previous period, due to the approach of seasonal demand off-season, the market will begin to correct rationally and begin to accumulate price moisture; thus ushering in a phased weak adjustment phase, which can also be understood as a technical correction of the market to lay a solid foundation .
The 18th National Congress of the Communist Party of China, which is related to the overall future development of the country, should have just ended at this time; a series of rigid administrative requirements and unreasonable construction needs have basically ended; at the same time, the high production capacity of steel mills will also moderately drop, and maintenance and production restrictions have become Mainstream. Although it is still unclear whether the 2012 winter steel stock market will arrive; it is certain that the slowdown in my country’s economic growth cannot be reversed in the short term, and the economic transformation is also being further implemented; Future market demand expectations should continue to be rational. Under such circumstances, in the era of low profits in the steel industry, the scale of stockpiling to be increased may remain at the location in 2011; it is difficult to drive high steel prices.
To sum up, the author roughly divides the steel price trend in the second half of 2012 into three stages; the overall trend is an inverted "U" curve; but it is not that steel prices are going in this way, we have limited factors; How the debt crisis will go; what major policy changes China will have during the 18th National Congress of the Communist Party of China will directly affect the direction of the domestic and even global markets; the steel market needs to pay close attention to these existing difficulties.