After the Ching Ming Festival, the procurement of construction sites began to gradually increase, and the domestic steel prices in major cities rose as a whole. However, due to tight funding, the terminal needs to purchase in general, there is no lack of steel companies to bear the attitude of the late period. The domestic steel mills such as Baosteel and other domestic steel mills lowered their ex-factory prices in April and May, causing a strong wait-and-see attitude in the current market. Steel prices are expected to fluctuate in the next week.
The tightening of capital is dominated by the price adjustment of steel mills before the Ching Ming Festival (at the end of March). The central bank raised the deposit reserve ratio again, and the deposit reserve ratio of large financial institutions was as high as 20%. After the holiday, the central bank once again decided to raise the benchmark interest rate for financial institutions from April 6. Although the central bank's interest rate hike has limited impact on the spot market, taking into account the overall capital chain situation of the market, from the upstream to the downstream, as well as the buyers in the middle, all are facing financial constraints.
Just this week, Baosteel announced that it would cut the ex-factory price of mainstream products, including hot and cold rolled products, by RMB 200-300/t in May. This is the first time that Baosteel's factory price has been lowered this year. According to Zhang Haitao, Channel Analyst of China Steel Network, Baosteel's downward adjustment of steel prices mainly considers two factors.
First, the main funding is tight. "The central bank used monetary policy to curb domestic inflation, and at the same time, it continued to increase the regulation and control of the building city. The tightening of the policy faced a shortage of funding for downstream companies in the steel industry, which had a decisive effect on the demand for steel products, coupled with the high output of the steel industry itself. No less, steel prices are a rational choice.
“In addition, due to the impact of Japan’s earthquake and the country’s preferential policies on small-displacement vehicles, the automotive industry’s orders have dropped significantly. Baosteel, which is represented by auto plates, has reduced the ex-factory price of the plate in May. The weak demand has become the downward adjustment of steel prices by Baosteel. The main reason," said Zhang Haitao.
At the same time, the manager of Inner Mongolia Spring Wanda Materials Co., Ltd. said, “Now the shipment is not good any time ago, although the recent steel prices rose, but Baosteel and other major steel mills cut steel prices, a greater psychological impact on the market, and now the market shipments In general, most steel traders are bearish on the outlook and believe that steel prices are falling and they are all watching."
High output and sluggish demand for inventory decline According to data from the China Iron and Steel Association, the average daily output of crude steel in the country in mid-March was 1,944,800 tons, which was a 2.18% increase from the previous period, creating a new high in production in the new period. Wuxi Huayou Special Steel's sales representatives expressed to the staff of China Steel Net that the domestic steel mills' inventory is still large and the output is sufficient. "Now businesses and intermediate links include downstream users who are holding a wait-and-see attitude. With a little purchase, the current turnover has not been heavy."
“Since the Spring Festival, most steel mills have implemented retaliatory resumption of production, resulting in a large inventory of steel mills, and the downstream demand has not really recovered. Traders have relatively little inventories, and steel mills' price adjustment is a game between steel mills and traders.â€
In addition, he also said, “Although demand will improve in April, it will be difficult to determine the duration of sustainable development. It is unclear how the theme of affordable housing can actually play this year. Government investment is limited, and places are also short of money. The latest start of the year is in November. There are policies under the policy. If the local foundation is also called start work, then the demand for the steel market this year is not optimistic."
The tightening of capital is dominated by the price adjustment of steel mills before the Ching Ming Festival (at the end of March). The central bank raised the deposit reserve ratio again, and the deposit reserve ratio of large financial institutions was as high as 20%. After the holiday, the central bank once again decided to raise the benchmark interest rate for financial institutions from April 6. Although the central bank's interest rate hike has limited impact on the spot market, taking into account the overall capital chain situation of the market, from the upstream to the downstream, as well as the buyers in the middle, all are facing financial constraints.
Just this week, Baosteel announced that it would cut the ex-factory price of mainstream products, including hot and cold rolled products, by RMB 200-300/t in May. This is the first time that Baosteel's factory price has been lowered this year. According to Zhang Haitao, Channel Analyst of China Steel Network, Baosteel's downward adjustment of steel prices mainly considers two factors.
First, the main funding is tight. "The central bank used monetary policy to curb domestic inflation, and at the same time, it continued to increase the regulation and control of the building city. The tightening of the policy faced a shortage of funding for downstream companies in the steel industry, which had a decisive effect on the demand for steel products, coupled with the high output of the steel industry itself. No less, steel prices are a rational choice.
“In addition, due to the impact of Japan’s earthquake and the country’s preferential policies on small-displacement vehicles, the automotive industry’s orders have dropped significantly. Baosteel, which is represented by auto plates, has reduced the ex-factory price of the plate in May. The weak demand has become the downward adjustment of steel prices by Baosteel. The main reason," said Zhang Haitao.
At the same time, the manager of Inner Mongolia Spring Wanda Materials Co., Ltd. said, “Now the shipment is not good any time ago, although the recent steel prices rose, but Baosteel and other major steel mills cut steel prices, a greater psychological impact on the market, and now the market shipments In general, most steel traders are bearish on the outlook and believe that steel prices are falling and they are all watching."
High output and sluggish demand for inventory decline According to data from the China Iron and Steel Association, the average daily output of crude steel in the country in mid-March was 1,944,800 tons, which was a 2.18% increase from the previous period, creating a new high in production in the new period. Wuxi Huayou Special Steel's sales representatives expressed to the staff of China Steel Net that the domestic steel mills' inventory is still large and the output is sufficient. "Now businesses and intermediate links include downstream users who are holding a wait-and-see attitude. With a little purchase, the current turnover has not been heavy."
“Since the Spring Festival, most steel mills have implemented retaliatory resumption of production, resulting in a large inventory of steel mills, and the downstream demand has not really recovered. Traders have relatively little inventories, and steel mills' price adjustment is a game between steel mills and traders.â€
In addition, he also said, “Although demand will improve in April, it will be difficult to determine the duration of sustainable development. It is unclear how the theme of affordable housing can actually play this year. Government investment is limited, and places are also short of money. The latest start of the year is in November. There are policies under the policy. If the local foundation is also called start work, then the demand for the steel market this year is not optimistic."
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