In order to deal with the risk of economic downturn, the government recently intensively introduced a series of measures to stimulate the economy, creating a favorable policy environment for maintaining stable and rapid economic development. Among them, increasing the investment in infrastructure construction (such as high-speed rail) has attracted the most attention. The market interpreted it as a 2.0 trillion version of the 4 trillion stimulus policy.
This will have a positive impact on the steel industry, which is in a period of industry-wide losses. However, Luo Baihui, a member of the association, also pointed out that the current situation of oversupply in the steel industry in China is difficult to change in the short term. Although economic stimulus policies will stimulate demand, it will take time for the steel market to recover.
According to Luo Baihui's research, the economic downturn has caused the market to have a serious shortage of steel, and iron ore and labor costs have remained high. Under heavy attack, China's steel industry has fallen into a sector-wide deficit this year, and the steel industry has entered the worst. when. Statistics from the China Iron and Steel Association show that the average daily output of crude steel in key large and medium-sized iron and steel enterprises in the country was 1.692 million tons in mid-May, and the average daily production of crude steel in the country was estimated at 2.0395 million tons, which was a slight drop from the previous month, but it was still at a high level. Steel supply is still greater than demand.
As the industry groups swayed the steel industry, the policy hand reached out in time. On May 23, the State Council held an executive meeting and proposed the launch of a number of major projects that are "bearing the overall situation and promoting strong performance." Under the stimulation of the new round of “iron-based†projects, home appliance subsidies, and the release of a number of very large industrial projects, the iron and steel market, which has long been depressed and seems to be on the horizon, has suddenly appeared hopefully reversed. The steel market began to react first yesterday, and the spot market for steel and iron ore also showed a steady increase.
"The forecast is indeed likely to reverse, because the new round of stimulus plans will become the 'black swan' in the market," said a senior steel industry source.
Steel ** rose significantly yesterday, the main contract thread 1210 rose 63 yuan / ton, or 1.56%. Some of the ** companies quickly turned upside down, saying that "demand has improved, and prices are expected to rebound."
The spot market has not yet responded so quickly, but changes have happened quietly. Steel spot prices gradually stabilized yesterday, especially in the strong market, the business mentality began to appear more positive.
The reason for this is that the market has gradually increased the expectation of the State Council to start the construction of a number of major projects that are “bearing the overall situation and a strong driving force†as well as a scale-up economic stimulus plan. The final approval of Baosteel's Zhanjiang and Wugang Fangchenggang iron and steel projects has been regarded as a typical event in the steel industry.
The start of major projects will strengthen the demand for steel products and the demand for ore will follow. Although yesterday’s iron ore market remained stable, some varieties of spot and ** markets also rose slightly.
In the previous month, the domestic steel market has been shrouded in the continuing gloom. The daily production of crude steel, which is at its highest level in history, coupled with the ever-shrinking demand for terminals, has prevented the industry from seeing any good in the fundamentals. “As far as the actual effect of the policy is yet to be verified, coupled with the continued sluggish demand and the high crude steel output, most businesses are holding a wait-and-see attitude towards the market outlook,†said an analyst.
The industry believes that even if the steel industry has expected changes in the short-term due to policy changes, whether the long-term real demand can be followed will determine whether such a reversal is the most important factor in the “short-lived†phenomenon. After all, the opportunity brought by the 4 trillion economic stimulus plan in 2009 and the subsequent negative impacts have left the industry vividly in sight.
“In the end, the fixed asset investment will have a large scale of stimulus, and the previous stimulus will be completed. Then how to follow up and how far the market will go will require real orders to verify.†In addition to real demand, the June Fund’s “examination†"The bank's attitude is also critical. “Receiving or releasing, what the banks do before and after June 30 should be the most direct embodiment of the policy.â€
This will have a positive impact on the steel industry, which is in a period of industry-wide losses. However, Luo Baihui, a member of the association, also pointed out that the current situation of oversupply in the steel industry in China is difficult to change in the short term. Although economic stimulus policies will stimulate demand, it will take time for the steel market to recover.
According to Luo Baihui's research, the economic downturn has caused the market to have a serious shortage of steel, and iron ore and labor costs have remained high. Under heavy attack, China's steel industry has fallen into a sector-wide deficit this year, and the steel industry has entered the worst. when. Statistics from the China Iron and Steel Association show that the average daily output of crude steel in key large and medium-sized iron and steel enterprises in the country was 1.692 million tons in mid-May, and the average daily production of crude steel in the country was estimated at 2.0395 million tons, which was a slight drop from the previous month, but it was still at a high level. Steel supply is still greater than demand.
As the industry groups swayed the steel industry, the policy hand reached out in time. On May 23, the State Council held an executive meeting and proposed the launch of a number of major projects that are "bearing the overall situation and promoting strong performance." Under the stimulation of the new round of “iron-based†projects, home appliance subsidies, and the release of a number of very large industrial projects, the iron and steel market, which has long been depressed and seems to be on the horizon, has suddenly appeared hopefully reversed. The steel market began to react first yesterday, and the spot market for steel and iron ore also showed a steady increase.
"The forecast is indeed likely to reverse, because the new round of stimulus plans will become the 'black swan' in the market," said a senior steel industry source.
Steel ** rose significantly yesterday, the main contract thread 1210 rose 63 yuan / ton, or 1.56%. Some of the ** companies quickly turned upside down, saying that "demand has improved, and prices are expected to rebound."
The spot market has not yet responded so quickly, but changes have happened quietly. Steel spot prices gradually stabilized yesterday, especially in the strong market, the business mentality began to appear more positive.
The reason for this is that the market has gradually increased the expectation of the State Council to start the construction of a number of major projects that are “bearing the overall situation and a strong driving force†as well as a scale-up economic stimulus plan. The final approval of Baosteel's Zhanjiang and Wugang Fangchenggang iron and steel projects has been regarded as a typical event in the steel industry.
The start of major projects will strengthen the demand for steel products and the demand for ore will follow. Although yesterday’s iron ore market remained stable, some varieties of spot and ** markets also rose slightly.
In the previous month, the domestic steel market has been shrouded in the continuing gloom. The daily production of crude steel, which is at its highest level in history, coupled with the ever-shrinking demand for terminals, has prevented the industry from seeing any good in the fundamentals. “As far as the actual effect of the policy is yet to be verified, coupled with the continued sluggish demand and the high crude steel output, most businesses are holding a wait-and-see attitude towards the market outlook,†said an analyst.
The industry believes that even if the steel industry has expected changes in the short-term due to policy changes, whether the long-term real demand can be followed will determine whether such a reversal is the most important factor in the “short-lived†phenomenon. After all, the opportunity brought by the 4 trillion economic stimulus plan in 2009 and the subsequent negative impacts have left the industry vividly in sight.
“In the end, the fixed asset investment will have a large scale of stimulus, and the previous stimulus will be completed. Then how to follow up and how far the market will go will require real orders to verify.†In addition to real demand, the June Fund’s “examination†"The bank's attitude is also critical. “Receiving or releasing, what the banks do before and after June 30 should be the most direct embodiment of the policy.â€
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