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Your Position: HOME > Industry > Steel prices skyrocketed after May 1st, the reason behind the "crazy stone"?
IndustryIndustry"The shipment volume is too large to be able to bear without cash shipments." said Zhang Ying, general manager of Beijing Ruichao Xinglong Trading Co., Ltd.. The steel shipments in previous years were about 5,000 tons, but now it has reached 8,000 tons. Due to high steel prices, the company's financial pressure has increased significantly.
At the end of the May Day holiday, domestic steel prices rose rapidly, giving birth to a new online term "unarmed"-describing the anxiety of being out of stock when steel prices are rising rapidly.
From the perspective of "weathervane" rebar, the latest weekly report of China's steel price index shows that the western rebar price index at the end of April was 5146 yuan/ton, an increase of nearly 400 yuan/ton from 4751 yuan/ton at the end of March.
The monitoring data of the Lange Steel Cloud Business Platform shows that on May 8, the average price of 25mm grade 3 rebar in key domestic cities was 5,661 yuan/ton, an increase of 106 yuan/ton from the previous day; the price of hot-rolled coil reached 6118 yuan/ton that day. Tons, breaking the record for the highest point in history in 2008.
Why have steel prices soared so fast recently?
Generally speaking, the price of steel is determined by a combination of factors such as supply, demand, cost, and external environment. Qu Xiuli, vice president and secretary-general of the China Iron and Steel Association, said that since the beginning of this year, high demand superimposed on the high cost of raw fuel materials, international monetary easing policies, environmental protection and production restriction policy requirements, capital market speculation and other factors have promoted the rapid rise of steel prices.
From the demand side, demand from downstream industries such as construction, automobiles, machinery, and home appliances has released relatively quickly. In the first quarter, actual steel consumption in the main steel industries increased by 47%, of which the construction industry increased by 49%, and rebar continued to be the variety with the largest inventory reduction. At the same time, foreign steel demand has gradually improved, and the strong export growth of mechanical and electrical products has significantly driven steel exports. The climate conditions in the second quarter were good, and it was still in the peak season for steel consumption.
On the other hand, the dual control of production and production capacity, as an important measure to implement my country's carbon peak and carbon neutral goal, has increased the market's production reduction expectations.
On April 28, the iron and steel import and export tariff adjustment policy was implemented to guide the iron and steel industry to reduce crude steel output. Just after the "May 1st" long holiday, the new version of the "Implementation Measures for Capacity Replacement in the Iron and Steel Industry" was released, and the ratio of steel capacity replacement was obviously tightened.
Cost is another important factor supporting steel prices. In order to stimulate economic recovery, monetary easing policies have been implemented around the world, which has led to a general rise in commodity prices. At present, the prices of raw materials such as iron ore, scrap, coke, and coal used in steel production are still at a high level and are on the rise.
Behind the "hot" steel prices are more crazy stones. On May 7, China’s iron ore price index showed that imported iron ore exceeded US$200/ton, a record high.
Luo Tiejun, vice chairman of the China Iron and Steel Association, believes that the main reason for the high iron ore price is the high concentration of the supply side, and the dominant power is in the hands of the seller. In addition, market expectations and hype are very large. He called for the government to give full play to the guiding role of the government in the case of market mechanisms failing to effectively curb the rising trend of iron ore prices.
Although the increase in imported iron ore over the same period was greater than the increase in steel prices, the booming market conditions in production and sales have greatly improved the economic benefits of the steel industry.
How did the downstream industry react?
Chen Yangqiao, deputy general manager of China Railway Construction Materials Co., Ltd., has been engaged in steel procurement for more than 10 years. The company's centralized procurement of steel not only guarantees internal supply, but also provides construction steel for large central enterprises such as China State Construction and China Communications Construction. He told reporters that due to the rapid increase in steel prices, it is obvious that the construction unit's capital pressure has increased and the payment has slowed down. As a trading company, the willingness to continue to increase inventory is small.
Open the automobile website, the price reduction promotion information is rushing to the face. The cost pressure caused by rising steel prices has not been transmitted to consumers. Mr. Wu, the general manager of a Shanghai Material Co., Ltd., has been engaged in the procurement of auto parts steel for more than 20 years. He bluntly said that some manufacturers dare not raise prices easily.
Since the end of last year, the home appliance industry has collectively announced price increases. In the first quarter of this year, many leading companies including Midea raised prices again. "May Day" was originally a traditional discount season for the home appliance industry, but this year has ushered in a wave of price increases, with prices ranging from 5% to 20%.
Will steel prices still rise in the future?
Some believe that due to many factors, it is difficult for steel prices to fall significantly in 2021 and will remain high and fluctuating throughout the year.
Wang Guoqing, director of the Lange Steel Network Research Center, said that the momentum and expectations for steel prices to continue to rise are still there, but high prices will cause downstream users to purchase cautiously, increase resistance, and weaken the cumulative superimposed cost support of high market risks in the later stage, and the momentum of excessive rise will Be suppressed.
The China Iron and Steel Association report analyzed that from the demand side, due to the rapid and large increase in steel prices in the early stage, the downstream steel industries such as shipbuilding and home appliances could not bear the continuous high steel prices, and the steel prices could not continue to rise sharply in the later stage.
In the long run, the adjustment of iron and steel import and export policies will help reduce dependence on imported iron ore and adjust domestic supply and demand; the new version of the "Implementation Measures for Capacity Replacement in the Iron and Steel Industry" will promote structural adjustments in the iron and steel industry and further increase concentration.