Post-holiday steel price rises to 90%

For the post-holiday steel price trend, the industry holds better expectations. Slowly rising raw material prices, sharply increased steel mills ex-factory prices, coupled with good expectations of support after the holiday period, businesses have pulled up a stronger state of mind, after the holiday market prices will again meet the "good start." However, the persistence and degree of post-holiday steel price rises, many people in the industry also expressed their concerns.

Under the influence of the traditional Chinese “opener” concept, traders expect to get a good start for the new year, and it has become customary to increase prices after the market opens. The data show that from 2001 to 2012, in addition to 2009 in the past ten years, after the Spring Festival, businesses have shown a pull-up behavior, and the probability of post-holiday steel prices has risen by more than 90%.

The habit of pulling up may be only one of the factors that predict the rise of steel prices after the year. On the other hand, it is the support from raw material costs. The price of raw materials is apt to rise and fall, due to the influence of the weather in the southern hemisphere, mineral shipments in Australia and Brazil have been affected, resulting in a firm ore price. In addition, the raw materials used in current steel production are mostly high-priced ore purchased from the previous period.

From December 2012 to early January 2013, iron ore prices have risen strongly and many people still remember them. During this period, the price of 61.5% grade Australian ore PB powder ** once soared to 157 US dollars / ton, while the lowest in 2012 was only 88 US dollars / ton, a substantial increase of 78.4%.

Subsequently, in the face of the madly rising import ore price, the market gradually became more rational and the prices fell slightly. Due to the lack of supply due to the weather, together with factors such as pre-holiday supplementation, the ore prices stabilized and rebounded again. As of February 4, the price of the 61.5% grade Australian ore PB meal** was US$151.5/tonne, compared to 2012. The low rises 72.16%

As the cost of finished products continues to rise, leading steel companies such as Baosteel, Wuhan Iron and Steel, and Shagang have responded to the shift in cost pressures by substantially raising the ex-factory price, and the cost of market arrival has increased significantly. The current market price is inconsistent with the price adjustment of steel mills. This is an important basis for the upward price movement in the spot market after the holiday.

In addition, the current mild recovery of the economy, the start of construction of some sites after the holiday, and the rise of the international steel market ... multiple factors are all favorable to the post-holiday steel market.

Excitement should be guarded against potential risks. After the Festival, businessmen will pull up their minds more strongly, and steel prices will increase or become “mainstream”. It should be noted that the current period of steel consumption is still in the off-season and the release of post-holiday demand can keep up with the rebound in steel prices. The pace is still unknown.

If the post-holiday market demand is active, traders will certainly continue to push up the selling price if they follow suit; if market demand is low, then the behavior of the company to take the initiative to promote sales is inevitable.

In recent days, the domestic construction steel stocks have increased significantly. If it is not digested in time after the holidays, it will cause considerable pressure on the market. According to the inventory of building materials in major markets across the country, on the 1st of February, the inventory of 35 city building materials was 8.8319 million tons, which was a significant increase from the inventory at the beginning of the year (January 4th) of 1,582,400 tons, an increase of 21.83%.

In addition to the lack of demand will disrupt the market supply and demand, the cost-driven, the steel mills continue to increase the ex-factory price of steel, in order to pass the cost pressure, once the post-holiday steel prices rushed high, do not rule out the steel mills to accelerate the use of resources to obtain their own profits Possible. At that time, the market may once again create a situation in which supply exceeds demand due to lower-than-expected demand, and steel prices will withstand resistance.

Benefit from many favorable factors, usher in the "opener" or inevitable after the holiday, "but whether the price can achieve a breakthrough, depends critically on the degree of downstream downstream demand."