Since the beginning of winter in 2017, the domestic steel price have been climbing steadily. The difference in steel price in the north and south area began to gradually widen. The price difference reach to the peak by the end of the year. The highest price difference is more than 1,200 yuan per ton. That set a new high in the North-South price difference.
The cause of the current big steel prices difference in northern and southern regions mainly due to several reasons. One is that, according to custom, the temperature difference between north and south is big after entering the winter. So the amount of increase is faster than the north during the price hike.
However, in falling market condition started in late December, the price range drop in China southern part was relatively mild. This leads to the price difference between the two have become bigger.
On the other hand, there is a certain imbalance in the supply of steel in the north and south regions. Steel production in the south is relatively weak, especially in the construction steel. Steel production in the north is relatively concentrated. Thus creating a situation that the north-south price difference of construction steel widening.
The phenomenon that there’s North-South price difference in the winter steel material has been exist for many years. There are many various factors, such as demand, supply, climate difference and so on. However, last year, due to the remarkable results in terms of cutting overcapacity, the unexpected increase in the production limit for the heating season from November, coupled with the manufacturers have a big estimate for the shut down of construction site in northern area.
That all made the specification of building materials more serious.
In addition, the exit of the “ground steel” also caused the price difference between North and South to continue to widen in mid-to-late December. At the time that the price of northern area fell back obviously because of the extremely shrinking demand, the southern area kept relatively firm.
It is noteworthy that, in the case of the price difference in North-South maintaining a high level, the major southern regions may exert a large amount of resources southward due to better demand, so that the prices will be subject to greater pressure.