China PPGI coil prices will be weaker now

Since the middle of October, in addition to manufacture volume, other major varieties of steel prices in the domestic market has ushered in a wave of the rally. Among them, the rebar prices rise 100 yuan/ton to 150 yuan/ton. Hot rolled plate and thick plate in price gains, although is not big, but also is able to get rid of a long fall more than let the market temporarily depressed atmosphere. However, the author believed that this round of steel price rebound is not caused by market supply and demand fundamentals to improve.

This round of steel price rebound is based on the market for a period in the future resource supply tight, caused by the expectations of supply pressure has not fundamentally ease. APEC (asia-pacific economic cooperation) meeting on November 5 ~ to be held in Beijing on November 11. To ensure the quality of the meeting have a good environment, the government will surrounding areas of Beijing, such as hebei industrial enterprises (especially the key pollution sources) mandatory emissions reduction measures. Tangshan city, hebei province is located in Beijing, for example, around 200 km range, was listed in key control area, the key control of iron and steel, coal and other industries. In this case, the market is generally believed that, before the end of the APEC meeting in north hebei steel production will be limited, the resources on the market supply is affected, there will be a part of the shortage of resources, and thus led to the recent downstream procurement, pull the trading volume and the rise in steel prices. And from the perspective of demand side, during the APEC meeting in steel mills were distributed at the same time, around Beijing area construction projects will be synchronized is restricted, which means that the related demand of steel consumption will be constrained. At the same time, account for more than half of the real estate industry construction steel consumption is still not get rid of the signs of a downturn. Although the bail-out of the current real estate industry, such as local governments are taking a series of relax restrictions bailout policies, the people’s bank of China credit policy, etc., these new policies really release some of the real estate purchase demand, but in the long term, the direction of the policy is to reduce the influence of the administrative measures for the market. At present, the real estate market supply and demand fundamentals have changed, but the result of market caused by the real estate policy adjustment is not, so let go of the purchase, after will not significant influence on the fundamentals. In addition, from the point of relevant economic index in September, whether the housing price or trading volume, continue to fall. Especially is closely related to the building steel demand has dropped sharply in the new construction area of the building is still in. In the first nine months, new construction area of the building fell 9.3% year on year, fell 13.5% year on year in new residential site area. At the same time, the nine months before the land area of the real estate development enterprises still fell 4.6% year on year, and continues to decline to expand (more than eight months before expanding 1.4%) also can be seen that real estate developers still too pessimistic about future expectations.

At the same time, the steel mills also said recently, the downstream industry demand is still in a state of atrophy. Volume production enterprises have some board will be scheduled for November – December of the blast furnace, production line maintenance plan in advance to October, the predicament of insufficient to cope with orders. Deep down already a long time, in addition, due to steel prices down time for two months in a row, so the market is super fell rebound repair demand, this is one of the reasons that this round of steel price rebound. Overall, hong kong-listed supply and demand fundamentals have not fundamentally improved, steel prices still don’t have to reverse the condition. Bad growing on the market recently, effective good supplement insufficiency, soon, the steel mill again raised ex-factory price of impetus and out of the building materials price rise has been, a significant decline. Difficult to achieve the current steel prices rise across the month, to rest. According to monitoring data show that as of 23, building materials prices dropped almost across the board in north China, the south where a few still persisted, and plank price weakness. National key city 25 mm level 3 thread average price of 2930 yuan, down 9 yuan. The 6.5 mm line average price of 3015 yuan, flat; 5.5 mm hot rolling average price of 2999 yuan, down 12 yuan. 1.0 mm cold rolled average price of 3928 yuan, down eight yuan. 20 mm thick plate in the average price of 2984 yuan, down 3 yuan. Billet prices from dropped this week has been in decline. At 23, tangshan 150 * 150 billet price 2460 yuan/ton, the highest point 2610 differ 150 yuan from last week. The downside risk is still larger. Heavy scrap market clinch a deal the slip, prices also fell. Outshine others forward imported iron ore prices in callback yesterday, platts index was down 62% at $2.25 to $79.75 / ton. Futures prices also tumbled, screw 1505 contract 23 fell 33 yuan to 2533 yuan/ton, hot roll 1501 contract fell 26 RMB 2834 yuan/ton. Lacking the support of raw material price and the futures market to drive, timber market activity is reduced greatly. Financing area. Steel industry shortage of funds is not a day two days of things, especially the credit crisis since last erupted repeatedly, this year is also continuous. And go deep into the steel mills from steel trade business, from private steel companies into the state, region and constantly expanding again. And since the central bank introduced a prudent monetary policy, is also rather toothpaste, and drop fully fierce flood. Last week the central bank open market after the net quantity is zero, this week also not waterproof on the open market, two weeks flat market liquidity. Market is on the surface of, let alone a iron and steel industry.