Steel prices continue to skyrocket for five years without market participants said it is difficult to understand

Seasonal warming has brought a rare rise in enthusiasm to the long-declining steel market.
According to the tracking data of China United Steel Network, from March 5th to 7th, Tangshan billet rose by 310 yuan to 2100 yuan/ton, and the increase of thread and other varieties exceeded 200 yuan. The current trend continues.
"So fierce gains, five years have not met." Xu Xiangchun, director of the steel network of Shanghai Steel Union, told the interface journalist that steel prices will enter the recovery channel after the Spring Festival. Compared with the price increase of steel that was not warm in the past few years, the performance of "Golden Three Silver Four" this year is rare.
Some steel mills in Shandong, Henan, Hebei, Anhui, and Shaanxi have raised their ex-factory prices by a large margin, with an increase of more than 100 yuan.
Local businesses are closely watching the movement of billets. On March 6th, most of the quotations in the building materials market in Beijing rose by 40-60 yuan/ton. The small and medium-sized dealers in the Jiangsu, Zhejiang and Shanghai regions of the East China market raised the price of various steel products by 120-150 yuan/ton. The price of Magang building materials in Hefei also pulled again. Up 100 yuan / ton.
"This is not the spring of steel, it is summer." The industry commented.
Hu Yanping, editor-in-chief of China United Steel, believes that this wave of rise is the result of the combined effect of “macro policy, market sentiment and supply and demand fundamentals”. This year's two sessions proposed that the annual growth rate of M2 (broad money) supply will increase by 13% from 12%, and the fiscal deficit rate will increase to 3%. Real estate destocking will be imposed by the city. “This means that money, finance and real estate destocking provide an imaginary space for the market and boost market sentiment.” Hu Yanping said to the interface journalist.
In addition, the 2.54 trillion yuan of real estate credit-transfer economy has pushed up real estate prices and pushed up commodity and steel futures prices.
In April, the World Horticultural Exposition held in Tangshan also strengthened the market's expectations for local environmental protection. On March 4th, Tangshan Steel Association issued the “World Horticultural Exposition Environmental Quality Assurance Measures (Draft)”, which proposed quite strict steel production restriction measures.
During the Expo, only 50% of the days of production will reach 36 days, and different atmospheric warning measures will be implemented according to the weather conditions. Affected by this measure, the domestic futures market rebar, iron ore and coking coal futures prices have been daily limit.
Low stocks provide fundamental support for steel prices. Since last year, steel mills have been forced to reduce production, resulting in relatively low market supply. Inventories in the circulation market, especially in Tangshan, are less than half of the same period last year. Although stocks are picking up recently, they are still at a relatively low level in history.
Steel mills are relatively slow to resume production. According to the data of Zhonglian Steel, since the Spring Festival, the volume of resumption of production has totaled 15,200 cubic meters, which translates into a daily output of pig iron of about 43,000 tons.
Thanks to this wave of gains, the profitability of steel mills has greatly improved. Xu Xiangchun told the interface journalist that the current domestic steel mills have generally achieved profitability. "The profit of building materials is about 200 yuan - 300 yuan / ton, and the profit of cold rolled sheet is more," he said.
Hu Yanping told the interface journalist that the current orders for steel mills are relatively full, and there is no pressure on the inventory of the building steel mills. Last week, the market turnover increased exponentially compared with that before the Spring Festival.
However, the above-mentioned industry insiders interviewed by the interface news reporters expressed doubts about the boost of downstream demand.
“How long the steel price rise can last depends on the support of demand.” Xu Xiangchun believes that after the holiday, the temperature will pick up and the government infrastructure projects will start to work. It is normal for seasonal demand to rise. However, there is no exact statistics on the number of demand pick-ups, and further observation is needed.
A report by my steel network on March 5th said that most market participants were “incomprehensible” when the price rose sharply. Some traders responded that downstream demand did not improve significantly. “In the case of downstream demand not fully recovered, More skyrocketing is just playing a one-man show."
Shen Fuyuan, an analyst at China United Steel, said that this wave of rises made him think of the stock market that fell sharply after the big rise. This round of rise was "overheated." Although the spring market after the holiday is often the most stretchable market in the year, it believes that the current price increase of steel is insufficient, “it is driven by passive pull-up”, he said, infrastructure needs The pulling power needs to be observed.
This round of increase also led to a marked weakening of steel export intentions. At present, steel exports have no advantage. The domestic price of some varieties is 300 yuan/ton higher than that of exports. Later exports may drop sharply.

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