Analysis and Prospect of China's steel market in 2

Analysis and Prospect of China's steel market in 2013

with the bottoming and stabilization of major economic indicators, the worst period of China's steel market has passed, and the new year will be dominated by a moderate recovery. Among them, domestic demand is significantly stronger than external demand, and monetary factors have become an important driver of price rise. Due to the impact of uncertain factors such as the debt crisis in Europe and the United States, the recovery process is difficult to smooth

first, the worst period of market demand has passed

in 2012, some economic indicators that show the strength of steel consumption, fixed asset investment and industrial production growth significantly shrank, and China's steel demand was weak. In order to prevent the "hard landing" of economic growth, relevant departments have introduced measures to stimulate domestic demand, especially to speed up the examination and approval of various investments. Since the beginning of September, the total investment of the projects approved by the national development and Reform Commission has exceeded 5trillion yuan. In October, the national railway infrastructure investment reached 69.8 billion yuan, a year-on-year increase of 2.4 times. It is expected that the railway infrastructure investment in 2013 is expected to exceed 500 billion yuan, much higher than this year's level

affected by it, China's economy, including steel demand, has bottomed out and stabilized in the fourth quarter. Among them, China's purchasing managers' index in October (PMI was 50.2, rising for two consecutive months and standing above the boom and bust line; fixed asset investment, industrial production and trade exports continued to rise in an all-round way in September and October. At the same time, steel prices and output also rebounded month on month. These signs indicate that the worst period of China's steel demand has passed. It is expected that with the gradual emergence of the effect of the national demand expansion policy, China's steel demand will grow moderately in 2013 and the annual crude steel consumption (including exports, the same below is expected to reach 750million tons, with an increase of more than 5%, which is higher than this year's level.

unit specimen with a base length of 100mm (the investment in the construction of hollow strips and the production of investment goods and equipment derived therefrom is the main source of the increase in steel demand. As most of the approved investment projects belong to transportation projects, especially urban rail transit and high-speed railway projects, their steel consumption intensity is higher, and the use of mechanical equipment and material flow are larger, so as to build a solid foundation for steel demand. In terms of varieties, the demand for construction steel and the demand for railway steel Mechanical steel demand, vehicle steel demand, special steel demand, etc., should become the main increase direction of steel demand. In terms of time, most of the investment projects were approved from June to August, calculated according to the six-month lag period, Actual steel demand of the above projects (starting from the preparation of materials, it will be gradually reflected around the beginning of spring 2013.

in the new year, due to the impact of the European crisis, the U.S. fiscal cliff, China Japan relations disputes and other factors, the external demand environment is severe, which makes China's steel consumption growth, mainly driven by domestic demand, showing a pattern of weak at home and weak at home. It is estimated that the annual steel export volume is about 55 million tons, and the growth rate is significantly lower than that of the previous year, and may even decline. The indirect export of steel, The export situation of automobiles, ships, mechanical equipment, household appliances and other products will be worse

second, domestic production has accelerated accordingly

in 2012, China's domestic steel demand was weak, becoming the "culprit" of market supply exceeding demand, which seriously inhibited the release of domestic production capacity. From January to October, the national crude steel output increased by only 2.1% year-on-year. It is estimated that the annual growth rate of crude steel output is about 3%, significantly lower than the average growth rate of about 10% in recent years

the restorative growth of steel demand in the new year is bound to lead to a corresponding increase in domestic production. It is estimated that the annual crude steel output will reach or exceed 750million tons, with an increase of more than 4%, higher than the growth level in 2012. Similarly, due to the demand pull, the output of railway steel, medium and heavy plates and other products is expected to end the decline in the new year, the output of steel bars, wire rods, steel tubes and other products will maintain a significant growth trend, and the output growth of hot-rolled sheet and other products will fall

the acceleration of crude steel production in the country, the relatively low level of iron ore and the contraction of domestic ore production are bound to increase the demand for imported iron ore. It is estimated that the annual iron ore import volume is expected to approach or reach 800 million tons, an increase of more than 5%

third, multiple factors work together to build the basis for price rise

the weak demand for steel in China in 2012 is the main factor for its price shock and decline. With the bottoming and stabilization of various economic indicators, the demand for steel in the new year gradually increases, and the relationship between supply and demand tends to improve, which has become a solid foundation for price recovery

in 2012, the prices of raw materials such as iron ore and coke fell sharply, with a maximum decline of more than 30%, and its cost support was significantly weakened, which was also an important reason for the decline in steel prices. After September 2012, the prices of iron ore, coke and other smelting raw materials rebounded, of which the CIF price of imported ore increased by 30%. It is expected that the future market will remain relatively high, which will raise the cost bottom of steel prices in the future

this year, steel traders' willingness to "store steel in winter" seems to be weak. If this is true. Indeed, there is no widespread "winter storage" situation, which is bound to inhibit the release of steel production in winter by steel enterprises, and is conducive to the balance of supply and demand after the spring of the new year

more importantly, after the second half of 2012, Solvay, such as the United States, Europe and Japan, will first show leading solutions for the use of seals, bearings, oil pumps and other fields. Developed countries have successively implemented an "unlimited" extremely loose monetary policy, resulting in a flood of liquidity, especially the Fed's de facto weak dollar policy, which will also push up the prices of steel, iron ore, coking coal and other bulk commodities in the international market

in particular, it should be noted that although the Fed's "qe3" has little significance for the U.S. economic recovery, due to the existence of huge interest rate differentials at home and abroad and low domestic asset prices, it can trigger "hot money" to enter China on a large scale again, directly and indirectly pushing up China's commodity prices and asset prices. For a period of time, the RMB exchange rate continued to appreciate, and even repeatedly rose by the limit, which began to show this sign. Although RMB appreciation will also reduce import costs to a certain extent, it is difficult to fully offset the upward driving effect of the influx of "hot money" on the prices of steel and related commodities

as a result of the combined action of the above factors, China's steel prices will show a gradual upward trend in 2013. The steel price level is higher than this year, and the price increase of construction steel is higher than that of production steel. If there is no double recession of the world economy, the ton price of the main contract of Shanghai rebar futures will hit 3800 yuan and 4000 yuan. The price of iron ore, especially the price of imported high-grade iron ore, will continue to rise. Its CIF price will reach or exceed $130 in the first quarter of 2013, and the annual average price will be more than $120

IV. it is difficult for the market to recover smoothly

although the recovery of China's steel market is the main tone in the new year, affected by a variety of uncertain factors at home and abroad, its recovery process is difficult to be smooth, accompanied by a large range of shock adjustment

from the perspective of domestic factors, it is mainly the existence of huge production capacity and vicious competition among enterprises. Once the price rises to a profitable position, iron and steel enterprises are bound to compete to expand production and destroy the balance between supply and demand until the price is pushed below the cost line of most enterprises and serious losses occur again

from the perspective of external factors, first, this is mainly because the haze of the deterioration of the European debt crisis is still lingering, and it is still entangled in the trouble of default - Rescue - Assessment - tightening until the sample is damaged, and the warning of the second recession of the world economy has not been lifted; Second, the United States is facing a "fiscal cliff". If this problem is not solved well, the American economy will fall into recession; Third, the Sino Japanese island dispute, which is expected to be difficult to resolve in a short period of time, is likely to evolve into a protracted economic war, slowing down the economic growth rate of both sides. To this end, the United Nations and other world economic organizations have warned that the risk of a double recession in the global economy still exists, and even rises significantly

it is the existence and fermentation of the above uncertain factors that make the recovery of raw material prices such as steel and ore in the new year full of variables, and adjustments will occur at any time. But even so, the worst period of China's steel market has passed. In any case, its market will not return to the lowest price of this year, showing a mild recovery trend as a whole, including labels, instructions and other identification contents and product certificates of conformity will not change