Due to the further reduction of the development of development zones, affordable housing and domestic steel (4928, -7.00, -0.14%), the negative factors of the domestic steel industry are further digested, bringing the domestic steel market supply and demand to a further balance, demand The stability of the market will further increase the resistance of steel spot prices.

 

Since the beginning of this year, due to the continuous increase in raw material costs, transportation costs, financing costs and the instability of the demand market, the steel market price has been at a high level of volatility, which in turn has made the operating environment of steel trading companies gradually less optimistic. .

 

Then, under various cost pressures, what is the trend of the steel market in the second half of the year?

 

Wu Gang, the domestic steel information and data expert and general manager of the Steel Home website, told reporters that due to tight supply of raw materials, further stabilization of market demand and continued decline in steel inventories, the price of steel will fluctuate in the second half of the year, but it is limited by steel production. Affected by unfavorable factors such as continued high operating, rising raw material costs and increased financing costs, the operating environment of steel trading companies in the second half of the year can only be relatively improved.

 

Steel enterprise operating costs increase

 

According to China Customs statistics, in the first half of this year, the average landed price of imported iron ore was 160.89 US dollars / ton, a record high, up 47.92 US dollars per ton compared with the same period last year, an increase of 42.41%.

 

Therefore, in the first half of this year, according to China's cumulative import of iron ore of 334.25 million tons, the foreign exchange cost of iron ore prices increased by 16 billion US dollars, according to the average exchange rate of renminbi against the US dollar 6.5, equivalent to increasing the cost of the steel industry. 104.11 billion yuan.

 

However, the pressure on iron and steel enterprises is not only reflected in the increase in the cost of iron ore. Li Shunyong, head of the market information department of Xinyang Iron and Steel Co., Ltd. said: “In addition to the impact of iron ore prices, the high price of coke prices and the price of steelmaking ingredients have risen. The high logistics costs, power cuts and the rapid rise in financing costs have also put pressure on the operation of steel companies, resulting in a passive increase in the price of steel."

 

Li Shunyong further said that the current price of coke is roughly 2,000 yuan / ton, the general grade of iron ore is 1450 yuan / ton, while the price of silico-manganese ore is more than 9,000 yuan / ton, and the cost of producing one ton of crude steel is about 4400. , but this is only the cost of guaranteeing supply.

 

As the country is now further cracking down on overload and the continuous rise in domestic refined oil prices, the transportation costs of raw materials such as iron ore have increased.

 

In addition, the increase in power curtailment and financing costs has led to a decline in the annual operating rate of the company, which directly led to a decline in the output of steel companies and an increase in operating costs, while the increase in financing costs has made the operating environment of steel companies even worse.

 

According to the data provided by the Steel House website, the average profit margin of domestic steel companies was only 3% in the first seven months of this year, but some industry participants told reporters that the average profit margin of domestic steel companies was only 2% at this time last year.

 

The cost pressure of steel companies will also drive further increases in various steel prices.

 

Steel prices are limited

 

After the US raised the national debt ceiling, the expectation of the depreciation of the US dollar has further gained international market recognition. The impact of the decline in the international stock market has affected the bulk material futures market. Domestically, due to June, the traditional low season of steel consumption, coupled with the continued impact of the southern rainy season, The spot price of steel during the period fell slightly.

 

However, due to the basically stable demand for steel in the domestic market brought about by the construction of development zones and affordable housing, and the further reduction of domestic steel inventories, the negative factors of the domestic steel industry are further digested, bringing the domestic steel market supply and demand to a further balance, demand The stability of the market will further increase the resistance of steel spot prices.

 

In this regard, Wu said: "Because of the increase in the US debt ceiling and the European debt crisis, the steel export market may remain in the first half of the year, and demand will only remain stable; the domestic market is limited by the rise in raw material prices and the continued high cost of financing. The release of steel production capacity is limited, but due to the demand for construction of affordable housing and the construction of development zones, the supply and demand of domestic steel market will gradually improve, driving steel prices to rise slightly.” (Economic Viewpoint) Source: Yulian Bearing Network