China’s steel demand and steel prices are weaker in 2019!

At the end of each year, the winter storage is put on the agenda of steel traders. However, due to the sharp fall in steel prices in the past month, steel traders have gradually lost confidence in the market.

"China's steel demand and prices will be weaker in 2019, but the situation will not be as good as 2015. It is estimated that the market price will be relatively low, and the current price is relatively high." General Manager of Jinan Rongxinda Economic and Trade Co., Ltd. In an interview with the reporter, Long said that “if the steel enterprises are not allowed to produce in winter, then the steel traders simply do not need to store the goods.”

Price upside down

"The current market price is 3,940 yuan / ton, and the ex-factory price is 3,970 yuan / ton, which means that each ton of goods sold costs 30 yuan without any other expenses. If artificial and rented space fees are added, one ton of losses exceeds 100 yuan." On the 15th, in Cao Long’s office, he said to the Economic Herald reporter somewhat depressed.

"This year's market can be described by jumping up and down. From March, steel prices have shown an upward trend, rising for 8 months. As of the end of October, the price of steel reached 4,800 yuan / ton. However, since November, steel prices have been opened. The curtain of the decline, in the more than one month, fell nearly 1,000 yuan." Li Zhen, deputy general manager of Jinan Qinsheng Economic and Trade Co., Ltd. said.

Li Zhen told the Economic Reporter that the rebar main contract fell from the early 4,100 yuan / ton in early November to the lowest point of 3,208 yuan / ton (December 1), followed by a wave of pull, 14 rebar main contract It is 3461 yuan / ton. In the spot market, it also fell by six or seven hundred yuan.

Analyst Wan Chao said that the fundamental factor in the current round of price shocks is the lack of buying sentiment caused by the deterioration of fundamentals. Since the price has fallen, the negative sentiment of the market has not disappeared. There is still a pessimistic expectation for the demand and arrival volume of the market. Market dealers generally hold the currency to wait and see to control the risk. Therefore, the current inventory of steel mills increases, and the social inventory decreases. The pattern has not changed. Therefore, before the obvious increase in social stocks, the downward trend of this round is hard to stabilize.

Cao Long believes that the plunge is "squeezing out the water." Several important factors supporting the surge in domestic steel prices have gradually changed. Factors such as the cooling of the property market and the resumption of production of steel mills have made the trend of short-term steel prices fall.

The price drop did not lead to an increase in sales. Gao Huapei, head of Jinan Jinqiu Lake Company, said in an interview with the Economic Herald reporter that many winter sites have been shut down during the winter, and the sales of rebar have fallen off the cliff. “Now the construction steel is almost stagnant, while other plates and wires are stocked on demand and there is no large purchase.”

As Gao Huapei said, Sun Hongzhi, general manager of Jiyang Senyi Co., Ltd. told the Economic Reporter that although the price of the steel plate slipped and slipped, he did not arrange for large batch purchases. “It’s still on-demand, and it’s not bought in large quantities because of the sharp price cuts. After all, ‘buy up and not buy down’.”

Gao Huapei told the Economic Herald reporter that he and his colleagues had communicated not long ago, and most people are not very optimistic about the future market. “The weakness of the futures market has directly affected our view on the spot market. Manufacturers have risen, but the market does not recognize it, and the overall transaction is not good. Everyone tends to pay more for cash.”

“Now I am worried that the market will plummet like 2015.” Kang Suling, general manager of Jinan Kanghong Trading Co., Ltd. said, “In this environment, regardless of the steel mill or the spot market, the price stagnation trend is intensifying. In the short term, This kind of slumping is difficult to reverse, and the downward trend of steel prices will continue."

Winter storage means loss

According to the normal operation in previous years, Cao Long has already begun preparations for funds to prepare for winter storage. When the 15th Economic Herald reporter saw him, he was drinking tea leisurely. "Now it is unintentional winter storage."

According to the Economic Reporter, the annual low season of the steel market is from November to March. The winter weather in the north is cold, the construction site starts to decrease, the steel sales decline, and the steel traders will smash the goods at low prices.

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