Steel price goes down
On the morning of February 22, China Iron and Steel Industry Association held an information conference in the form of a video conference to introduce the current operation and problems of China’s steel industry, respond to market concerns, and call on relevant parties to objectively analyze changes in market supply and demand and prepare for the epidemic While working, various measures were taken to maintain the stability of the steel market. Luo Tiejun, vice chairman of China Iron and Steel Industry Association, member of the epidemic response leading group and leader of the market stabilization working group, presided over the meeting and answered questions from the media.
At the meeting, China Daily, China Metallurgical News and People’s Daily suggested: What impact did the epidemic have on the steel industry? how to respond? What are the key tasks that the industry will carry out in the later stages?
In response, Luo Tiejun said that the impact of the epidemic on the steel industry is concentrated in six areas:
First, the transportation is limited, the supply of raw and auxiliary materials is tight, and the products are difficult to leave the warehouse. In order to effectively control the spread of the epidemic, traffic supervision has been strengthened in various places. Some regions have also adopted measures such as city closures and road closures. Some transportation companies have some holiday workers who cannot return to work on schedule, which has a significant impact on the import of steel materials and the outflow of steel. . Especially in the area of automobile transportation, due to the inability to supply raw materials and auxiliary materials relying on automobile transportation, some enterprises have experienced emergency supplies of raw materials and materials, which has caused great difficulties in production organization, forward and safety. Some ports, terminals, warehousing and other logistics nodes also encountered problems such as restricted operations, insufficient personnel and anti-epidemic materials, which seriously affected the normal transportation of steel products and raw fuels.
The second is the decline in downstream demand. Affected by the epidemic, many provinces and cities across the country have announced that they will postpone the resumption of work. Major steel industries such as construction, machinery, automobiles, shipbuilding, and home appliances have been postponed. This has led to a significant decline in demand for downstream steel in the first quarter. The status of orders from steel mills can also reflect downstream demand. Most steel mills have already organized orders for February before the Spring Festival, and it is difficult to organize orders in March, but also difficult in April.
Third, steel stocks increased. Because of the epidemic situation caused by the Spring Festival holiday, the decline in terminal demand and the obstruction of transportation and other factors, steel mills and social steel inventories increased significantly after the Spring Festival than in the past. From the perspective of steel plant inventory, the impact of the epidemic on the steel production side is less than the demand side. It is expected that steel plant inventory will increase in the short term. In early February, the steel industry’s key statistical enterprise steel inventory was 18.51 million tons, an increase of 5.45 million tons from the previous period, an increase of 41.7%; an increase of 8.98 million tons, an increase of 94.2%. From the perspective of social inventory, in the past 2-3 weeks after the Spring Festival holiday, the social inventory peaked, and it is expected that the peak inventory level this year will be higher than before. In early February, the social inventories of 5 major steel products in 20 cities totaled 14.71 million tons, an increase of 6.52 million tons over the previous month, an increase of 79.6%, and an increase of 7.79 million tons, an increase of 115.7% over December. Taken together, it is expected that steel inventories will remain high in mid-to-late February.
Fourth, exports may be affected. From the perspective of enterprises, export orders for March have been organized before the Spring Festival, but there are uncertainties as to whether all shipments can be successfully carried out. It is expected that the export of steel products in the first quarter will decrease year-on-year, of which the export decline in February is large. On the whole, the export situation from April to May may be slightly better than the first quarter, but it still shows a downward trend year-on-year.
Fifth, the price of steel fell and the price of iron ore rose. Decreasing downstream demand and increasing steel stocks have caused steel prices to fall. This week (February 17-21) China’s steel price index (CSPI) was 100.55 points, down 1.40 points month-on-month, 4.93 points lower than before the holiday, and 3.31 points lower than the first week after the holiday, and lower than the lowest level in 2019 104.28 points. Among them, rebar 3,544 yuan / ton, down 200 yuan / ton from the pre-holiday period, and 151 yuan / ton from the first week after the holiday. At present, demand has not clearly started, and the spot market has fewer transactions. After the Spring Festival, the rebar futures fell sharply. On the 21st, the rebar main contract closed at 3485 yuan / ton, down by 15 yuan / ton from the pre-holiday period and up by 252 yuan / ton from the first day of the market. The narrowing of the current basis over the previous period reflects the market’s belief that the impact of the epidemic is short-term and that pessimism has gradually improved. The price trend of steel products in the later period depends on changes in production, demand and inventory. The key is the progress of containment of the epidemic and the impact of financial markets.
In the first week after the Spring Festival, the price of iron ore dropped, but due to the recent hurricanes and heavy rains in Vale, some mining companies lowered their production forecasts for the first quarter and released information to the society. The market is worried that short-term ore supply may have a gap and promote the recent iron ore supply. Ore prices have risen, and iron ore prices have remained relatively high. On February 21, the price of imported CIOPI iron ore (62%) was US $ 90.81 / ton, which was an increase of US $ 11.28 / ton from February 3. The closing price of the main iron ore contract was 675.5 yuan / ton, up from February 3. 69 yuan / ton.
Sixth, iron and steel enterprises implemented measures to reduce production. Affected by the epidemic, steel mills have stopped production and overhauled to varying degrees, and the number is increasing day by day. In January 2020, the output of iron, steel and materials of key iron and steel enterprises increased year-on-year. In early February, the daily output of crude steel was 19.394 million tons, a decrease of 2.68% month-on-month and 3.16% year-on-year. , A year-on-year increase of 0.91%; the daily output of steel was 1.759 million tons, a decrease of 9.09% month-on-month and an increase of 2.51% year-on-year. It can be seen that affected by the epidemic in February, enterprises began to reduce output.
Regarding how the iron and steel industry responded to the current situation, Luo Tiejun said that Baowu and Shagang made a detailed introduction, reflecting the situation of iron and steel enterprises in the country. In particular, Baowu Group Qingshan Base is located in Wuhan and has adopted extreme measures. Prevent epidemic spread, provide oxygen to Wuhan Hospital, and ensure the smooth operation of production and operation. During this period, the Iron and Steel Association proactively contacted enterprises and the government, played a role of bridge and bond, reflected the voice of the enterprise, and provided policy suggestions to the government. Most of them were reflected in the policies recently issued by the Party Central Committee, the State Council, and relevant departments.