Steel market prices will rise in stages

Last week, there was a zero declaration of iron ore at the port of China's iron ore spot trading platform, and after the zero trading week, the iron ore spot trading platform had only been traded for two consecutive weeks. Affected by multiple factors such as overcapacity in the domestic steel industry, continued sluggish demand, and high international iron ore prices, China's steel industry has had to make thorough structural adjustments. At the same time, the domestic steel market continued to decline, and the decline continued to increase. The basic varieties of rebars are still falling, hot rolling is operating at a low level, and the cold-rolled spot market remains weak. Over the weekend, the composite steel price index closed at 108.08, down 3.93, the long price index closed at 111.13, down 4.45, and the sheet price index closed at 105.57, down 4.12. Luo Mohui, CEO of Jinmo Steel, believes that the downturn in the steel industry needs to start from eliminating backward production capacity, optimizing product and technology transformation and upgrading, and strengthening international iron ore right to speak.

While the price of steel fell, the crude steel output of small and medium-sized steel mills rose instead of rising, further exacerbating the pressure of overcapacity. Zhu Jimin, president of the China National Iron and Steel Association, said: "In the first half of the year, the output of non-member companies has increased by 12.9%, which means that the new crude steel production this year has come from non-member local SMEs."

It is reported that at present domestic non-member steel companies are mainly concentrated in Hebei, Shandong, and Jiangsu provinces. In the current situation of overcapacity, non-member enterprises in these regions are still “insisting” incremental production.

At the same time, the latest statistics show that in July China’s manufacturing purchasing managers index further declined to 50.1 from 50.2 in May and 50.2 in June, and the purchase volume, import, purchase price, production and operation personnel, supplier delivery time, etc. The sub-indicators were weaker than in June.

Affected by the decline in demand, import prices of iron ore and aluminum fell significantly in imports. According to customs statistics, from January to July, China imported 420 million tons of iron ore, an increase of 9.1%, and the average import price was US$138.5 per ton, down 15.2%. According to statistics, the spot market for imported iron ore dropped a lot last week. Data show that the spot market price of imported ore ports fell by 5-20 yuan/ton last week. Among them, prices of 63.5% printing powder, PB powder, Yandi powder, 63% of coarse and low grade printing ink fell by 10, 15, 15, 15, and 5 yuan/ton from the previous week.

In order to reverse the unfavorable situation in the iron and steel industry, Zhu Jimin said that at present, the Association is gathering together the difficulties faced by the iron and steel enterprises in their operations and is preparing to make recommendations to relevant departments to ease the current difficulties of enterprises through active fiscal policies and structural tax reductions. For example, financial support and tax incentives are given to enterprises for energy conservation and emission reduction, elimination of backwardness, and production-for-jacking, mergers and reorganizations, etc.; and they call for necessary tax reduction and exemption policies for domestic mine development and exemption from various funds and fees, etc. We hope to further reduce corporate financing costs.

Recently, Rio Tinto expressed its commitment to invest 16 billion U.S. dollars in development projects this year and expects China's economic growth to accelerate. Rio Tinto CEO Alberto said that the company expects that China's economic stimulus measures will be put in place by the end of this year. 500 infrastructure projects will start this year and next year. He added that the company's orders have been filled.

While the market is expected to be pessimistic, industry insiders predict that, in addition, in September, the season will improve and the construction progress will accelerate. Demand will be released compared with the summer season. The steel market price will rebound in stages, but due to the large steel production base, The long-term contradiction between supply and demand will put pressure on the market and limit the market's recovery.