Loss of production, no steel price, or continued pressure

Due to sluggish demand, steel prices have continued to fall this year, and the situation of steel mills has become increasingly difficult. There are many steel production enterprises in Shandong and North China, and it is one of the major steel production regions in China. At the same time, North China is also the main force for “North and South Materials”. We have reached a conclusion by investigating several steel mills in Shandong and North China, although this year steel Exports of enterprises are in good condition, but it is difficult for the steel market to materially change under the circumstances that domestic demand is unlikely to recover effectively, and future prices may be further pressured.

Meager surviving stocks fell slightly

From the perspective of orders, at present, orders for building materials in domestic orders are generally unsatisfactory, and some of the steel mills with iron-smelting capacity have shifted to coils; while coiled-plate companies have slightly better orders than building materials, they are overall more than in previous years. Obviously not. At the same time, since April of this year, China’s auto output has experienced negative growth for the sixth consecutive month, and the year-on-year growth rate has also gradually decreased. In addition, the downward pressure on China's auto output in the first quarter is still relatively large, and the demand for auto plates in the later period will inevitably be affected. Export orders have been better this year. Many steel mills currently use export prices and quantity to increase exports, so the recent export orders Generally good.

From the production point of view, at present, except for some enterprises whose equipment needs to be overhauled, steel mills basically maintain full production. Most of the production enterprises are operating on cost-saving management and profit-making operations. Rebar has been profitable or lossy or has a marginal profit of several tens of yuan. The gross profit of coiled steel is still between 100-200 yuan/ton. Under normal circumstances in previous years, steel mills would have to lose 200 yuan/ton or more (that is, their marginal contribution fell below zero) for some time before they would consider reducing production. However, this year, some tons of steel profits are positive, but because of bank pumping Loans lead to a passive production cut due to the loss of cash flow. Therefore, the cost bottom line and time node for steel mills to reduce production this year are more dependent on cash flow status and cannot be generalized.

From the inventory point of view, after the continuous inventory increase in July and August, the rising trend of steel ingots in September was suspended. East China's steel mills were generally at a low level due to the reduction of local supply, which also contributed to the relatively firm steel prices in East China; Inventories in Shandong and Hebei are still slowly rising, and some steel mills have absorbed inventory by increasing export orders.

From the perspective of raw materials, iron ore stocks basically remained at a relatively low level. Although the current iron ore prices continue to fall, the Platts index has dropped below 80 US dollars, but steel mills are not willing to make up the iron ore reserves. Mainly due to the current price uncertainty and financial pressure, leading steel mills to be more cautious about the purchase of raw materials.

North goods south situation is not optimistic

Under normal circumstances, from November to February of next year, with the end of the northern project, orders have shrunk. In order to absorb the surplus production capacity of northern steel mills, northern resources will be shipped to the south, taking into account the shrinking demand for pallets and stocks this year, The north steel mills are looking for resources to go south and bound to increase price concessions, while deliverable resources such as dedication, new Fushun and other steel factory acceptable southward prices, or directly determine the top of the 1501 contract price. However, judging from the current demand situation, even if we do not consider the price factor, considering the demand alone, the demand in the south may not be able to consume the resources of the north steel plant south, and the situation is more severe.

Exports are in good condition to ease steel plant pressure

Our final conclusion is: First, the current domestic building materials market is relatively weak, and the continuous decline in building materials prices has resulted in minimal profit margins for steel mills. Some conditional steel mills have gradually reduced the production of building materials and increased the production of plates with certain profit margins; secondly, 2014 Since the beginning of the year, China’s steel export volume has continued to increase. From January to August, China’s cumulative steel exports totaled 56.83 million tons, a year-on-year increase of 35.4%, a record high. With domestic demand continuing to be weak, steel exports have eased domestic supply pressure. However, from the perspective of price, there is still no advantage, there is a phenomenon of “price change”; Third, the excess production in the North still exists in the fourth quarter of this year, and the pattern of “Northern cargo” will appear as usual, taking into consideration the nationwide scope this year. Due to the lack of demand in the steel market, the situation of North-South cargo is not optimistic; finally, currently, the operating rate of steel mills in North China is generally high, and production at full capacity is basically maintained. The pressure on the supply side still exists. If the demand cannot recover effectively, the price may further increase in the future. Pressure.