The hottest steel price in 2018, can it sing all t

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Can the steel price in 2018 "sing all the way"

since the beginning of this year, the steel production capacity reduction effect has exceeded expectations, and the backward production capacity of medium frequency furnaces and "ground bar steel" has been fully cleared. Recently, the key steel production areas in Beijing Tianjin Hebei and the surrounding "2+26" cities have entered the production limit period in the heating season, and the most stringent "work stoppage order" has been fully implemented. In this context, what is the price trend of steel market in 2018

economic observation has learned that the capacity reduction will continue next year due to performance failure. In the heating season, the total amount of steel supplied by the sensor set under the eccentric wheel will be restrained to a certain extent. At present, many experts and analysis institutions are optimistic about the steel price next year. However, Zeng Jiesheng, a well-known analyst in the steel industry, believes that the steel market in 2018 is not optimistic, and there is room for steel prices to decline. For the time being, the steel price will comprehensively exceed 5000 yuan per ton. On the contrary, the average level next year will be about 5% lower than the current price. "This is reasonable and necessary, but due to the uncertainty of many factors, there may still be a roller coaster market in the steel market next year."

Zeng Jiesheng told the economic observer, "the production restriction in the heating season has led to a decline in steel demand, but the supply decline is more obvious, and it is unlikely that there will be a significant correction before the year. If the steel price is still high, which is not conducive to the downstream manufacturing industry and the development of the national economy, the government may regulate the steel price by supervising the price adjustment of large enterprises as it does with the coal industry."

demand rebounded after the end of production restriction in March next year

some insiders pointed out that up to now, the removal of production capacity has achieved better than expected results, which is the key factor for the strength of the steel market. According to the goal of reducing 140 million tons of steel production capacity within three to five years, there will still be about 25million tons of capacity reduction next year. He Lifeng, director of the national development and Reform Commission, once said at the central meeting of the 19th CPC National Congress that the excess steel production capacity has exceeded 110 million tons

it is reported that the relevant personnel of the Department of raw materials industry of the Ministry of industry and information technology and the Industrial Coordination Department of the national development and Reform Commission recently held a tripartite consultation with the China Iron and Steel Industry Association. In 2018, the Ministry of industry and information technology and the national development and Reform Commission will effectively promote the work of steel de capacity; Establish and improve the long-term mechanism of market-oriented and legalized ban on "ground bars" to strictly prevent the resurgence of "ground bars"; Urge all localities to do a good job in capacity replacement, strictly and absolutely abide by the strict national standards, and prohibit new steel production capacity

"but the capacity formed by the release of compliant blast furnace and electric furnace capacity and the legal transfer of electricity is also large. This year, 40million tons of iron making capacity and 15million tons of electric furnace capacity will be added and resumed production. Next year, 20million tons of blast furnace iron making capacity and 20million tons of electric furnace steel-making capacity will be added. Many of these are gradually put into production in the second half of this year, and the new supply next year is not small." Zeng Jiesheng told economic observer that after the end of production restriction in March next year, seasonal demand will rebound, but supply may grow rapidly, and the pressure on the steel market will increase rapidly

weakening demand is a high probability event

Zeng Jiesheng believes that next year, monetary policy may change from relatively loose to tight, and economic growth will gradually slow down, resulting in a steady decline in steel demand is a high probability event

"we predict that the growth rate of fixed asset investment in 2018 will be about 7.2%, roughly the same as that in 2017. The growth rate of infrastructure investment will decline slightly, and manufacturing investment will stop falling and stabilize. Although the upstream is under the pressure of de capacity and de leverage, corporate profits may be mainly used to repay liabilities rather than equipment investment, the downstream investment demand may drive the overall manufacturing investment to stop falling and stabilize." Zeng Jiesheng said

in addition, affected by the real estate policy, Zeng Jiesheng predicted that the growth rate of real estate sales would fall to about 1.5% next year, and the growth rate of real estate investment would bottom out in the middle of the year, with the bottom at about 4.7%. Affected by the slow downward trend of real estate investment and infrastructure investment, it is expected that the real GDP growth rate will slow down to 6.6% next year

"it is expected that the growth rate of machinery, automobile, household appliances and other steel industries will also slow down next year, and the pulling effect on steel demand will be weakened." Zeng Jiesheng immediately became passionate about the economic observation. He said that machinery is closely related to infrastructure and real estate. As the growth rate of the latter declines and machinery exports will perform well next year, the overall growth rate of machinery will be flat or slightly lower than that of the previous year. Next year, the preferential automobile purchase tax will be cancelled, and the growth of automobile production and sales will also slow down

some industry experts believe that since this year, the economic recovery momentum of the world's major economies has been good, and all countries have realized that the policy of adopting excessive quantitative easing to stimulate the economy is too risky to be sustained, so they intend to "brake"

"it is beneficial for the commodity market for countries to adopt monetary tightening policies. At the same time, fiscal policies stimulate the economy and stimulate the demand for commodities, but the money supply is basically negatively correlated with commodities. Monetary tightening, especially the tightening of the Federal Reserve, will have a certain inhibitory effect on the global commodity market." Zeng Jiesheng said

exports will further decline

according to the data of the General Administration of customs, China exported 4.98 million tons of steel in October 2017, a year-on-year decrease of 35.3%; In June, China exported 64.49 million tons of steel, down 30.4% from the same period last year

in Zeng Jiesheng's view, the sharp decline in steel exports this year is mainly due to the narrowing of the price difference between domestic and foreign prices, and the upside down of domestic and foreign prices of many varieties, which has greatly reduced the export momentum of enterprises. The enterprise now has a good sales and profits, and will not care about domestic or foreign. It is expected that the domestic steel market will be relatively good next year, with a small internal and external price difference, a small export momentum for enterprises, and it will be difficult for foreign exports to rebound, with a slight decline

in addition, Zeng Jiesheng said that there is room for iron ore prices to decline, and coal price monitoring will be the focus of the national development and Reform Commission next year. The high price operation is difficult to continue, and the downward probability is large, so the support of raw materials to the cost of steel prices will be further weakened

"Due to the gradual release of production capacity formed by large-scale investment in recent years, the four major mines in Australia and Brazil will add nearly 50million tons of production capacity next year. It is expected to increase the production of 40million tons of iron ore, while the growth of foreign demand is limited, and most of the increment will flow to China. The domestic scrap supply is increasing, and the oversupply of iron ore will intensify. Next year, the import price of iron ore will further decline, and the average price of 62% grade Australian Pb powder will be about $58/ton 。” Zeng Jiesheng told the economic observer that the supply growth of coal and coke is also greater than the demand growth

it is understood that due to the high price of electricity and coal, the downstream power plants are suffering. The national development and Reform Commission has been studying the appropriate extension of the release period of advanced production capacity, advocating coal and power enterprises to sign long-term cooperation contracts and supervise the implementation. "This series of measures will have a substantial impact on curbing the rise of coal prices, while power coal and coking coal have a certain substitution and interaction, which is not conducive to the rise of coking coal and coke prices." Zeng Jiesheng said

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