The Sino-US trade war has started. What changes will happen to the steel market?

Recently, Trump's import tariff on steel and aluminum has attracted the attention of all countries in the world. The Sino-US trade war has started, what will happen to the steel market? What is the first reaction in the steel market? What is the specific situation? Let's learn together.

The Sino-US trade war has started. What changes will happen to the steel market?

US President Trump has determined that imported steel and aluminum products are under US national security and decided to fully levy taxes on imported steel and aluminum products (ie, 232 measures) from March 23, with tax rates of 25% and 10%, respectively. How does the field trade war affect the domestic coal coke market?

What is the first reaction in the steel market?

Look at the capital market first: down the platform in a down limit

Look at the spot market: continuous downward adjustment, falling below the 4000 steel finger support level

On the 25th, Maanshan Iron and Steel's building materials prices fell by 20 yuan. After adjustment, Maanshan warehouse pick-up price: thread 3720 yuan / ton, wire 3810 yuan / ton, snail 3870 yuan / ton. Hefei warehouse pick-up price: thread 3740 yuan / ton, wire 3830 yuan / ton, snail 3890 yuan.

- Is it a bit of panic? In fact, everyone is overreacting.

Look at a set of data first:

China's total steel exports to the United States: According to data released by the General Administration of Customs, the total exports of US steel in 2017 was 1.18 million tons, accounting for 1.6%. In 2017, China's total steel exports amounted to 75.24 million tons, of which South Korea exported 11.4 million tons, accounting for 15%. Secondly, Vietnam, the Philippines, Indonesia, India, Malaysia and other countries accounted for 10%, 5%, 3%, 3%, and 2% of China's total exports of steel, respectively.

Look at the export structure again: According to the data of the General Administration of Customs, in 2017, the total volume of pipes, coated plates and tin-plated plates in China's steel exports was close to 500,000 tons, and the export volume of bars was about 120,000 tons. The export volume of medium and heavy plate, large section steel and railway materials is small.

Considering the combined effects of various factors, what will happen to the next phase of the steel market? We believe that:

Sino-US trade wars will change What will happen to the steel market?

1. Steel market

(1) The end of high profits, price pressure

I don't think too much analysis of this result. Even without a trade war, the sustained high profits of an industry are not destined to last, not to mention the goal of China's supply-side structural reforms is to improve product quality and competitiveness.

(2) De-capacity, reduced export volume

In 2018, China's steel industry will reduce the steel production capacity by about 30 million tons. This is the government-led de-capacity work. In this trade war, steel prices and output may force steel companies to shift their capacity from passive to active. Steel production in 2018 may not continue to grow and will remain at the same level as last year. Steel exports will fall by 10% from last year.

In summary, we believe that because the main market for steel consumption in China is still the domestic market, the steel companies' ability to resist risks after the supply-side reform has increased significantly. The impact of this trade sanctions initiated by the United States on the steel industry and the steel market is limited. Controllable, but the impact is direct, especially the impact of the heart is greater than the real impact. Considering that the trade war will further increase China's openness, increase domestic demand, and speed up the construction of the Belt and Road, we do not have to worry about the short-term weakness of the steel market. As for the coal coke market, we still maintain a relatively optimistic view.

1. The coke market, “the cost support of coking coal in the upstream and the profit margin of steel enterprises in the downstream”, the next stage, the cost support or the bottom line of coke price will fall to a certain extent and will stabilize.

2. The coking coal market is still the most promising variety. In fact, in the past few days, coal coke futures prices have fluctuated drastically. We can see that coking coal futures prices are the strongest and have not effectively fallen below the platform. Therefore, we are still optimistic about the coking coal market in the second quarter.

The above is about the Sino-US trade war, what changes in the steel market will be related.

Source: China Enterprise Network

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