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May Steel Price Is Expected To Continue Its Upward Trend In May

Apr 27, 2018

Since April, the spot price of steel has continued to rebound at the end of March, rising by more than 4,000 yuan/ton. Industry sources said that in the short term, the supply and demand situation has improved, and steel prices are expected to continue rising in May. However, under the constraints of a large stock base and high profits, the pace of resumption of production of steel mills has accelerated, and mid-term steel prices will fluctuate widely.

Break through 4,000 yuan/ton mark

According to "My Steel Net" statistics, on April 24, the average price of HRB400 (20mm) rebar in 25 major cities nationwide was 4,047 yuan/ton, which was 36 yuan/ton higher than the previous day. At the same time, 10 steel mills in the country issued price adjustment information, all raising steel prices by 30-80 yuan/ton.

In terms of inventory, according to the “My Steel Net” data, on April 19, the national thread society stock was 8,045,500 tons, a week-on-week decrease of 631,300 tons, and wire rods were 2,623,300 tons, a decrease of 193,200 tons per week. The total social inventory was 1,050,800 tons, which was a decrease of 824,500 tons on a week-to-week basis, which was a drop of about 3.88 million tons compared to the peak value of this year and was in a continuous decline.

In terms of stocks in steel mills, the stocks of 139 steel mills were 3.359 million tons, which fell by 10.0% in Zhouhuan, and fell by 28% in the three weeks, down 14.3% year-on-year.

On the demand side, according to the “My Steel Net” statistics, as of April 23, the average trading volume of the nation’s major traders was 219,419 tons in April, an increase of 59,093 tons, an increase of 36.86%, an increase of 24.81% year-on-year.

Regarding this steel price increase, Zhuo Chuang Information Steel analyst told the China Securities Journal that the main reason lies in the macro-oriented and improved downstream demand. Reductions in liquidity and tax reductions continued to release liquidity; real estate development investment in the first quarter was 2.13 trillion yuan, a year-on-year increase of 10.4%, and a three-year high growth rate. At the same time, before the May holiday, some businesses have the necessary amount of supplemental bank needs.

Supply and demand patterns improve

According to the “Notice of Doing a Good Job in Resolving Surplus Capacity in Key Areas in 2018” recently released, the steel industry reduced its crude steel production capacity by about 30 million tons by 2018. De-capacity will further promote the supply and demand pattern of the steel industry.

At the same time, environmental inspections by steel mills continue after the heating season. At the beginning of April, 50% of the production was restricted in the Qiwu'an area. On April 10, the Xuzhou steelworks stopped production in a large area and the production time was indeterminate. On April 24th, a one-month environmental special inspection was carried out on the Jiangsu coast, and the medium and small steel mills partially stopped production. . As the province with the largest crude steel output next to Hebei, Jiangsu's environmental protection production upgrade will benefit the overall steel market.

Steel production is still rising. According to the statistics of the China Iron and Steel Association, the average daily output of crude steel in key steel enterprises in April was 1.876 million tons, up by 5.05% from the previous month; the national average daily output was estimated to be 2.4113 million tons, which was an increase of 4.25% over the previous period. The steel stocks of key steel enterprises amounted to 14,382,900 tons, which represented an increase of 7.46% over the previous period; crude steel stocks amounted to 2.696 million tons, which represented an increase of 12.51% over the previous period.

Industry sources said that in the short term, the spot market prices have continued to rise since April. Under the impetus of stock-ups, short-term market prices will remain upward. However, attention should be paid to the constraints of large stock bases and accelerated production of high-profit steel mills. The steel price will fluctuate widely in the medium and long term.

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