Trend of Chinese steel market in 2017
Han Weidong, the vice CEO of Youfa Group made a keynote speech in the “12th circum-BOahi-sea steel market forum “. Here is the main content.
Chinese steel market in 2016 makes a turnaround
Firstly, the reduction of output and “supply-side structure reform” make the steel price inflation. In the past two years, the average daily production is 2.2million tons. But it shrinks about 20 million tons these months, which made a solid foundation of the price hike this year. Due to the “supply-side structure reform”, the high price and profit maintain an available capacity.
From 2011, the steel price starts to decline, and people reduce stocks. The inventories remain a low state till last year. In the past, especially during the spring festival, the steel stock of Beijing is about 1 million tons. But currently, it has remained 20 thousand tons, even lower than it, for a long time. Although the supply-side structure reform try to save the situation, the stock of the first half year is 30% lower than that of the same period last year. And it creates a new national social inventory low this year and prepares to rise the price .
Secondly, cost inflation is another cause of price hike. Steel price grows less than 1 time. And the price-rise of raw materials, including coking coal, coke and alloy, is larger than that of steel. Therefore, the price will rise.
Thirdly, ease monetary policy promotes steel price hike. The stable economy and loose monetary policy make the price hike. What’s more, future goods also promotes the price hike of steel.
When the GDP reaches 6.7% this year, it remains 3 quarters this year. And the economy index, such as GDP and PMI, keeps stable. To be honest, it prepares a high price this year. And people expect to make the steel market turnaround.
Lastly, FED dose not increase the interest rate and the price hike of staple commodities are two inducements. Because of the increase interest rate of FED and the change of global economy, the price of staple commodities, including steel, declines largely last year. Therefore, in order to keep the staple commodity market stable, FED does not increase the interest rate this year. All the staple commodities advance in price this year.
And it is a period of super drop bounce, and the steel market overlaps it. Overall, many factors make the prosperous steel market in 2016.
The Chinese steel market in 2017 is full of hope
The supply and demand will keep balance next year. But it will make a breed differentiation and the export volume will decrease. In fact, the output growth rates of hot-rolling products and hot-rolling products are over 5%, but that of construction materials and seamless tube is zero, or even shows negative growth. The breed differentiation is obvious.
The cost will increase tomorrow, and speaking right of mine and coke will be promoted. Once the steel supply and demand achieve balance, the steel market will have more voice.
Management method will have a qualitative change, and the enterprise will seek for their own profit models. Many steel factories make their own second-party e-commerce, which differs the third-party ecommerce. Frankly, it brings a great change, and many factories, such as CAMELSTEEL, will pay more attention on building brand value next year.