NEWS

Since June, the terminal weak consumption, coupled with seasonal consumption off-season, so serious oversupply of steel market, prices decreased significantly. In Shanghai, three rebar, for example, in early June when the price of 2170 yuan / ton, as of the end, the price dropped to 1980 yuan / ton, down 9%. Rebar prices fell below 2,000 yuan / ton, steel losses, nearly 80 percent of steel loss.

Cement prices, weak consumer

According to statistics, China’s real estate and infrastructure construction is still in the doldrums. May, although our real estate sales up 15%, but our new housing construction area, but fell by 13%. This shows that the real estate market is still in the market dragged down steel consumption. January to May, the cumulative growth rate of fixed asset investment in infrastructure was 17.98 percent, the Central than January-April decline.

Spot market, according to the relevant data show that China’s cement prices in most areas since early June, falling 2-3 weeks old, which shows the current end-consumer market is still weak, cement stocks data can also be obtained from evidence. China’s key enterprises cement stock in May year on year increase of over 18%, which in previous years was rarely met. Under normal circumstances, cement stocks are in November after construction of outdoor gradually stopped, appears significantly increased. This year, cement stocks since March on high, prices are often down, which proves that the end-consumer market with exceptionally weak compared to previous years.

Loss of steel production continued to increase

Steel prices continue to fall this week, with the Shanghai region three rebar, for example, prices fell 60 yuan / ton, while the price is relatively strong ore, steel production losses continue to increase. According to last week’s price, the current steel is about 330 yuan per ton loss, which is the biggest loss since the 2012 tons of steel mills. Under normal circumstances, when loss amounted to 300 yuan per ton of steel / ton, and then for two months or so, there will be a lot of stop production phenomenon.

Losses as mills, steel mills shutdowns increased. According to statistics, as of June 25, domestic enterprises known seven mills 9 blast furnace maintenance, is expected to yield 650,000 tons; 8 hot rolled steel 9 Hot Rolling Mill shutdowns, Thermal volume production of 1.015 million tons; three plate steel plate mill five shutdowns affect production of 170,000 tons of plate; 9 bar mill eight building materials factory shutdowns affecting production of about 167,000 tons thread. Total production of 2.002 million tons of crude steel equivalent, accounting for about 3% of the monthly output. This is the country we track data is consistent with blast furnace utilization rate dropped, according to statistics, steel blast furnace operating rate of about 75% by the end of May fell to around 67% at present. Blast furnace operating rate of decline of the ore and coking coal, coke prices will form a greater pressure.

Ores, for example, a lot of steel in order to reduce costs have increased the proportion of lump ore into the furnace, while reducing the proportion of fine ore into the furnace, which makes fine ore traded slightly lower. At the same time, many steel mills to reduce the procurement of raw materials, ore market pressure gradually. It is understood that ore port stocks decline after 10 weeks in a row, there will be increased for the first time this week.

Coking coal, coke and ore similar situation. With the decline in steel procurement, although reduced coking plant operating rates, but steel mills and port stocks still rose slightly, while the coking plant can not shut down the furnace can stew. In the case of sharp drop in demand, the coking plant choices are more passive, and therefore coke coking coal prices compared to more pressure.

Pressing down costs

History always repeats itself, this time falling rebar, it is first manifested as a result of decline in steel consumption passive minus inventory, thus limiting steel production, and therefore the price of raw materials for the formation of greater pressure. The decline in raw material prices, driven down the cost of steel, so the second round steel prices fell as scheduled. Steel prices fell in the second round of the process, the steel did not show improvement in profitability, and therefore the behavior of steel inventory reduction initiative. Mills from the beginning of passive to active drop down inventory stocks, have to deal with the rapid decline in market prices fell sharply and mills profitable.