The fixed assets investment continually increasing

According to data released by the national development and reform commission, 18 fixed assets investment project has been approved in January, involving 153.9 billion CNY of total investment. The cumulative growth rate of investment in construction was 10%, up 0.9% from previous month, rather than reduced as usual. The data showed that fixed assets investment was still increasing. In our field research, we found that railway construction started early after spring festival. The project progress also accelerated.

The steel demand top in March 2017

From supply and demand of steel market, the steel demand peak is still in March. In the field research, many steel enterprise have already got the orders for 2017, such as carbon steel plate，reinforced steel rebar and other orders They have enthusiasm to produce and stock steel product. By February 10th, the domestic social inventory of steel rebar was 8.08 million tons, up 46.28% before the spring festival. On the one hand, the steel enterprise transfer steel product inventory to traders. On the other hand, the steel traders express optimism for later steel demand, and willing keep the inventory. Steel product inventory do not rise significantly. By the end of January, steel product inventory was 14.15 million tons, 14.95% higher than before spring festival. Because the inventory was not too high, so the steel enterprise want to keep steel price rather than sell steel product at low prices.

Steel enterprise adjust own procurement policy while ore price changes

A part of steel enterprise resumed production. With the iron and steel ore inventory of steel enterprise reduced, the purchasing power of steel enterprise will increase. At present, iron and steel ore price have improved. Because the probability of large increase in iron and steel ore, steel enterprise should adjust their own procurement policy.

Steel Demand is not Growing Accordingly, though steel products manufacturers’ inventory increased

In fact, steel demand is not growing so much accordingly. The steel profile, steel plate export, steel pipe export fell a lot more than 20% than the same time last year. Since August 2016, Steel pipes, plates, profiles export have already declined for the 9 consecutive month for single month. At the same time, these steel products manufacturers’ inventory increased, 12.76 million tons for last year, and 14.43 million by the end of March this year.

Iron and steel production increased with iron and steel price

Iron ore inventory at port continue to increase since December 2016. The data shows the port inventory reached 133.6 million, a new record. The domestic iron and steel production increased along with iron and steel price rising. From January and March, the domestic iron and steel production was 2.98 billion tons, rose by 15.9% year on year.

From the beginning of 2017, the steel products manufacturers profit has been maintained at a high level, profit of steel plate manufacturer, steel line pipe manufacturer and steel profile manufacturer average is about 1000 CNY / ton. The steel demand still keep relatively stable, the infrastructure will also need kinds of steel products, such as steel plate, steel pipe fitting, steel bar ect.

Steel products prices will fluctuate in a reasonable range

Due to reducing capacity policy, lots of steel product manufacturers like steel plate manufacturer, steel line pipe manufacturer, steel profile manufacturer shut down. But it will not affect the steel products supply, such as carbon steel plate, API steel plate, steel pipe fittings ect. Iron and steel manufacturers with long production line / high technology and the electric furnace can meet market demand by increasing production. Wu Jingjing, the senior analysis, remind that lots of steel products manufacturers showed high enthusiasm for manufacturing more products, and it is a hard trend to increase the production, so steel product price will fluctuate in a reasonable range.

Steel product price displayed a rising trend

In the data, the whole steel product price displayed a rising trend since 2016. As of October 21^st, the steel product composite price index rose 19.17 to 79.00. The key steel product price, such as high line, deformed steel bars,  hot rolled coil plate, respectively rose 27.4%、27.9%、44.9% year on year. The whole level of steel inventory was lower than last year. According to statistics, China main social steel inventory dropped 8.3% to 9.4 million tons year on year by the end of September. It increased 0.79 million tons at the beginning of the year, an increase of 9.2%. As the weather turns  cold, the fourth quarter of the steel product market gradually into the off-season demand. Social steel inventory will rise, but the whole level will be lower than last year.

Raw material rapid rose influence benefit of steel plate manufacturer

It was worth noting that the raw material phased price rose too fast to influence the profit of steel plate manufacturer. According to statistics, as of October 14, coking coal and metallurgical coke prices rose by CNY 507 and 849  per ton, up 81.4% and 126.2% from the beginning of the year. At the same time,  an increase  was 36.1% for steel price.

The government provide better support for steel plate manufacturer

In order to strengthen and enlarge a better trend of steel plate manufacture, the government will focus on  three aspects  work:

First, to deal with the relationship among steel capacity, structure adjustment and transformation promotion.

Second, to create a fair and orderly steel product market environment.

Third, to follow and analyze the price trend of steel plate manufacture, strengthen the prediction and prejudgment, ensure the steel plate price stable at a reasonable range.