April steel market twists and turns May forecast

In April, the trend of steel prices was more entangled. After rebounding from the previous low point to the current position, the market and the steel mills clearly analyzed the views of the market outlook. The market wants to take advantage of the current situation of large inflation and speculate on the price increase of steel raw materials. Downstream transmission costs have risen, but in the current environment where stocks are still high and supply exceeds demand, steel mills are more cautious about the market outlook, band-based operations are the mainstay, and the market-based strategy is implemented during the period of market price decline, pushing up the ex-factory price of steel. Pulling up the inventory cost of the whole market, in the stage of rising market prices, grasping the price increase range, attracting customers to order steel mill futures, and maintaining a certain capacity utilization rate. In the current situation of uneven domestic environment, the steel price trend in May How will it evolve into a current focus on the high cost (including capital cost) market?   Behind the tightening of regulation The GDP in the first quarter was 963.11 billion yuan, calculated at comparable prices, up 9.7% year-on-year and 2.1% quarter-on-quarter. In March, the consumer price index (CPI) rose by 5.4% year-on-year, setting a new high for 32 consecutive months, down 0.2% from the previous month. In the first quarter, China's GDP was 963.11 billion yuan, calculated at comparable prices, up 9.7% year-on-year and 2.1% quarter-on-quarter. The added value of the primary industry was 598 billion yuan, up 3.5% year-on-year; the added value of the secondary industry was 467.8 billion yuan, up 11.1% year-on-year; the added value of the tertiary industry was 435.43 billion yuan, up 9.1% year-on-year. The data shows that in the first quarter of this year, the prices of international energy, raw materials and metal mines rose by 18%, 13% and 5% respectively compared with the end of last year. In the first quarter, the ex-factory price and purchase price of China's industrial producers rose by 7.1% and 10.2% respectively, while the pressure of downstream transmission began to appear. The increase in non-food prices in CPI continued to expand. After the data was released in March, the macro management issued successively issued regulatory signals to the market. 1) The People's Bank of China announced on the 17th that it would raise the deposit reserve ratio of deposit-taking financial institutions by 0.5 percentage points from the 21st. Zhou Xiaochuan, the governor of the central bank, pointed out that China’s monetary policy should be properly tightened, and this trend will continue for some time. 2) From the beginning of April, the State Council sent 8 inspection teams to carry out special supervision on the implementation of the State Council's real estate market regulation policies and measures in 16 provinces (autonomous regions and municipalities). Although the results of the comprehensive inspection still need to be summarized, most of the summary points of the inspection team have pointed out that the local government still needs to implement the policy of centrally regulating real estate. According to the implementation of local policies, it is not possible to exclude the possibility of introducing stricter control policies. Among them, local land supply, housing price control targets are the focus. After the judgment on the economic situation in the first quarter of this year, the State Council Standing Committee held on April 13 once again decided that the next step of real estate regulation and control should remain unshakable and the control should not be relaxed. 3) The recent decline in the US dollar has once again promoted the rapid appreciation of the renminbi. At the same time, the recent appreciation of the renminbi is expected to continue to accelerate as the exchange rate instruments move further to the forefront as a new means of slowing down imported inflation. At present, from the judgment of the overall economic situation, we can draw the main line of internal and external policy control. Internally, we will control the rise of CPI as the main policy control target. On the one hand, we will increase the control over the price increase of agricultural products, and increase the production and control of agricultural products. The circulation cost is the main measure. On the other hand, it will also be vigilant against the PPI to the CPI conduction increase factor within a certain period of time, which will increase the productivity, dilute the price increase impulse by oversupply, and solidify the liquidity of the currency. The foreign market will be downgraded by the recent US evaluation, and the timing of the US dollar index will accelerate, which will accelerate the appreciation of the renminbi. The anti-inflation monetary policy goal, together with the current continued weakness of the US dollar, will jointly constitute the two driving forces for the continued rise of the RMB exchange rate. In the process of RMB appreciation, the import and export ratio will be adjusted appropriately. This year's increase in imports will also become a measure against inflation, because the hot money that has entered the domestic market through various channels and waits for appreciation will certainly not enter the domestic market through normal trade channels. Market capital control is convenient, and in the case of global inflation, increasing the import of resource products is also a means of depositing hot money. Recently, the iron ore import port that has soared in major ports in China is undoubtedly also A normal economic phenomenon arising from the background of the appreciation of the renminbi. After the market and steel mills began to fall again after the sharp fall in steel prices after the early Spring Festival, traders and steel mills formed a de facto price alliance. On the one hand, steel mills control the speed of shipments in the market, reducing the large amount of resources to concentrate on the steel market. The impact of prices, and traders through the form of pallets, lock the liquidity of steel resources, reluctant to sell the psychological, and objectively created conditions for the current rebound in steel prices. Recently, steel mills unanimously lowered the May ex-factory price, which in fact reflected the cautious bearishness of steel mills on the price of steel products in the later period. On April 19, Baosteel finally chose to lower the ex-factory price, followed by domestic leading steel mills such as WISCO Benxi Steel. Both cut the ex-factory price in May. The mainstream big steel mills cut the ex-factory price of steel in May. In fact, the biggest concern is how to digest the growing steel supply. According to the China Steel Association, the national estimate of China's crude steel output in early April was 19,792,000 tons, of which 76 member companies. The output of crude steel was 16.534 million tons, and the daily output was 1,653,400 tons, an increase of 2.4% from the previous month. After experiencing a rebound in steel prices after the holiday, steel prices in April have changed. Although the mainstream varieties of Baosteel and other steel mills remained unchanged in April, only a few of them rose slightly at the original price, but steel mills such as Taigang, Benxi Steel and Wuhan Iron and Steel Co., Ltd. all cut prices through various forms of disguised preferential subsidies, and The range is mostly 200~300 yuan/ton. Moreover, according to current cost estimates, the gross profit of low-end steel products such as rebar and other building materials produced by steel mills is 300-350 yuan/ton, while the gross profit of producing hot and cold coils is 150-250 yuan/ton. The price reduction is still very large. According to historical experience, only when the ex-factory price of steel mills is close to or lower than the production cost, the steel mill's production enthusiasm will be suppressed, and the steel market price will really go out of the downturn. From the perspective of traders, the recent rise in the cost of capital has become a problem that has to be considered. From the overall financing cost, the monthly capital cost per ton of steel will increase by 10-15 yuan. In the case of the trade profit of ton steel is 50 yuan (measured by the normal market conditions of rebar), the cost of holding the spot of the trader has risen sharply. Under such circumstances, whether traders still have the courage to gamble on steel prices is a big question mark. The former steel mills control the delivery, and the traders push the steel prices through the lock, but the current downstream demand Even if it is released, it is impossible to achieve the intensity of capacity release. The only thing worth looking forward to is the promotion of the demand for steel in the construction of a comprehensive flowering housing. However, according to the recent situation of the real estate inspector team, although the construction goals of the affordable housing have been set, the relevant supporting funds and land have not been fully implemented, which means that before June, the construction of the affordable housing will be steel. The support of the price will not be great. Another thing worth studying is the follow-up effect of the earthquake in Japan. At the time of the earthquake, everyone thought that the damage of Japanese steel mills would benefit China's steel exports, and the related post-disaster reconstruction will be imported from China, so the domestic steel price is Japan has fully rebounded since the earthquake, but from the current situation after the earthquake in Japan for more than a month, the facts are not the same as what we originally expected. The major steel mills that are currently the most affected by the earthquake in Japan have resumed production in late March. According to the data, by the end of 2010, Japan's steel production capacity was about 132.4 million tons, and crude steel output was 109.6 million tons, ranking second in the world after China. At the same time, Japan is also the world's largest steel exporter. Of the 109.6 billion tons of crude steel, about 60 million tons meet the domestic demand in Japan, and the rest are exported. On April 18, the World Steel Association estimated that the earthquake in Japan affected the annual production capacity of 7 million to 10 million tons. On April 20th, Japan Steel Association released data: Japan's crude steel output in March was 9.092 million tons, the first time in 17 months, but the decline was only 2.7%. Compared with China's crude steel output growth of more than 9%, the domestic steel export situation will be affected after the earthquake in Japan is clear. In May, the trend of steel price trend is from the above aspects. The trend of steel prices in May is not optimistic. Once the steel mills judge the inflection point of steel prices, on the one hand, they will realize hedging on futures, and the huge amount of insurance will be on the steel. The rebound will produce a repression, on the other hand, it will go ahead of the market, accelerate the price reduction, and stimulate the order of traders and downstream users by lowering the ex-factory price, and transfer the risk of steel price fluctuations to the market. On the other hand, the risk of policy regulation has been highlighted. The government has been wary of the continued rise of the PPI in the near future. The early control of agricultural product prices will become a realistic model for the control of industrial product prices. The government's measures to control the price of industrial products will mainly be from the production and circulation areas. Starting from two aspects, the production field will promote the production of large-scale state-owned steel mills to ensure supply. For the circulation field, it will tighten the monetary policy and strictly check the collateralized financing methods such as pledge trays to encourage traders to accelerate circulation and reduce circulation costs. In the case of high inflation, the steel price in May will maintain a small adjustment trend, but there will be no collapse after the Spring Festival. In order to prevent policy risks, all parties in the market still need to maintain a normal state of mind, accelerate circulation, and wait for the goods to rise. The mentality must be abandoned.
This year, along with the high level of price and the pressure of imported inflation, the central bank is using "the full use of monetary policy." Anti-inflation has become the first policy goal of monetary policy. After the reserve ratio and the benchmark interest rate have been raised several times, the recent exchange rate instruments are also being incorporated into the anti-inflation policy portfolio.

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