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The Price Of Steel Is Volatile And The Index Has Risen More Than 1 Times
- Mar 14, 2018 -

Since the second quarter 2016 until end of 2017, in the nearly two years' time, although the price of steel market volatile, but overall, or unilateral upward trend, compared with previous low point, steel price index rose more than 1 times.


It should be said that domestic steel prices have risen strongly in the past two years, and more of it is a return to a reasonable level. As steel prices have been gradually restored to a reasonable level from a low price, the unilateral rise phase has ended. Overall, the future domestic steel market, will be in small increase in the wide swing pattern. For example, the difference between the highest and lowest price of the contract rebar is likely to reach 1,000 RMB per ton.


In the future, the power of steel price wide oscillation mainly comes from three aspects.
  

First, the steel "secret produce" and the regulation game throughout the year continuously become the speculation theme of the two parties. Two years in a row to clamp down on “substandard steel", reduce steel production capacity, strict environmental protection etc, makes the backwardness and surplus capacity atrophy, preliminary estimates the overall reduction is not less than 200 million tons. This makes the steel market this year has improved the capacity of the environment, thus provides the important basis for the steel prices are relatively strong. There is no doubt that the domestic steel price is already with good profit, generally reached hundreds of RMB per ton, or even thousands of RMB. So high profits and fierce competition to grab the market will certainly promote the iron and steel enterprises seize the opportunity and try every ways to increase productivity, of course it also includes some of the shut-down equipment even banned " substandard steel" attempt to resurge. Therefore, the competent department has a high profile meeting, and strict measures are taken to prevent the return of outdated production capacity, such as "substandard steel", to consolidate the production capacity of steel. According to the world steel association, crude steel output in January was 67m tones, down 0.9 percent from last year, a trend that has been shown.
   
Second is the uncertainty of the weather, which occasionally stirs up sentiment. For some time, the atmospheric conditions in the northern regions of Beijing, Tianjin and Hebei have improved. Apart from the strict environmental protection of all levels of government, the "work of god" has also contributed to the improvement. But no one can guarantee that the weather will remain the same this year. If the atmospheric dispersion conditions in the future are poor, and the severe haze is frequent, it is bound to increase the intensity of steel production; otherwise it will be loosened accordingly. So the author thinks in the previous article, this year's steel market, in a certain sense is actually "the weather decides”. The uncertainty of the weather, from time to time, stirs the mood of the market participants and triggers a surge in steel prices. Before and after the Spring Festival this year, the national social steel inventories continue to increase, so the inventory empty iron and steel enterprise, steel shipments active, the steel industry circulation climate index rise, such as iron and steel circulation industry total PMI index of 48.3 in February 2018, is up 2.1% last month (Lange steel cloud business platform statistics released), which included a bet on the weather factors slip and increase their production.
   
Third, the speculative capital is strong, which will play the theme of the hype, and contribute to the rise and fall of the steel market. Speculative capital, must be pointed out that, is not stable price and stable market, but prices rise and fall the mammoth market, it is best to sharp rises in prices tumbling. Therefore, speculative capital will also give full play to the theme effect, promote the market, and expand the price rise and fall.

 

Steel market ends its unilateral rise to broad market volatility, undoubtedly will increase the market participants' operation difficulty. At the beginning of the New Year, the steel market is set to a wide range of shocks. This needs us to be more cautious and more market observative and analysis, including pay attention to the long term weather forecast to the north, to keep up with the pace of the market, as far as possible to be in an impregnable position.