Since the second half of the year, the domestic steel price bubble began to burst, showing a large overall decline, with a general decline of more than 10% and a high point of more than 20%. Signs of a "hard landing" in steel prices are faintly visible.
After this round of decline, what is the trend of the steel market in the next stage? Once again become the focus of attention. At present, there are generally two views: one is that the decline in steel prices has bottomed out and will trigger a strong rebound after the Olympic Games, and the steel market will return to the "bull market"; Another point of view is that the steel market in China continues to be weak, and the rebound after the Olympic Games is possible, but it will not last. I prefer the latter view.
What is the trend of steel market in the next stage? It is necessary to analyze and compare the main factors that caused this round of steel price decline. If these factors are only short-term factors and no longer exist in the future, then the steel market will have a strong and lasting rebound after a short adjustment; If these price reduction factors do not disappear, continue to exist and further ferment, then the steel market will not be optimistic.
There are several reasons for the sharp drop in China steel prices this round:
First, there is a problem with consumer demand. That's all that matters. Since the second half of 2007, the market sales of the three final consumer goods of steel in China, namely, houses, automobiles and household appliances, began to be weak, and the prices of some products continued to fall. Moreover, the growth momentum of some investment products that consume steel, such as machine tools, ships, machinery and equipment, has also dropped significantly. According to estimates, in the first seven months of this year, the total output of 10 steel-consuming products nationwide increased by 16.9% year-on-year, and the growth rate dropped by nearly 9 percentage points compared with the same period of last year. Among them, the output of steel ships has fallen sharply for several months in a row, and automobile production has also entered a very difficult year, with a large number of household appliances overstocked. Moreover, the obvious slowdown of the world economy and the tightening of the external environment have also led to the decline of China's steel products exports (including direct exports and indirect exports). In a word, the growth of steel demand in China has indeed slowed down significantly this year. The market depression and falling prices of some downstream industries, or even stopping production or reducing production, require the excessively high steel prices to return to reasonable prices.
Second, the prices of global primary products have generally fallen sharply. Since the second half of this year, affected by many factors, the prices of primary products such as crude oil, copper, aluminum, rubber and soybeans have generally fallen sharply in the international market; The domestic stock market has a hard landing, with a drop of more than 60%; The property market is also depressed and the transaction is extremely light. With the downward adjustment of the global economy and various markets, China's domestic steel prices can't be immune.
The third is the influence of the Olympic Games. During the Olympic Games, construction sites in Beijing and surrounding areas stopped working, and some production enterprises reduced production or stopped production, which also reduced the demand for steel.
Second, the slowdown of demand growth and the downward shift of production cost support points are the "price suppression factors" that continue to exist.
Among the three factors mentioned above, the Olympic factor is only a temporary factor, but also the weakest factor, which is neutral (because the output of steel mills is also decreasing while the construction volume is decreasing). For the national market, it can even be ignored. In other words, even without the influence of the Olympic factors, the domestic steel price, which was highlighted by the previous bubble, will fall.
It is worth noting that, although after the Olympic Games, some steel consumption in North China, which has been suppressed due to work stoppage, will be released, which may lead to price rebound. However, due to the small increase in demand, it is only limited to Beijing and its surrounding areas. Therefore, in terms of national demand growth, the rebound should be small. If the increase is large, it is more an excuse, so it lacks a solid foundation and is difficult to last. Moreover, while the demand is released, the steel production capacity in North China has also been restored, and the supply has also followed. It can be seen that the "Olympic final factor" is neither favorable nor unfavorable to the real domestic steel supply and demand relationship, but more of a neutral influence factor. It must also be pointed out whether steel traders have prepared for the market rebound after the Olympic Games and placed great expectations on it. If so, this "dark horse in the market" may disappear, and this market may be gone.
Therefore, whether there will be a real, decent and lasting strong rebound in China's steel market in the next few months of this year, the most fundamental thing is to see whether there is a big start in steel demand at home and abroad, and whether other markets, especially smelting materials, can heat up.
Judging from the future development trend, the sustained slowdown in the growth momentum of consumer demand and the continuous decline in the prices of global primary products are the two "price-depressing factors" that continue to exist and further ferment steel, and will not disappear in a short time. This determines that the main tone of the domestic steel market in the next stage is to run more weakly.
On the one hand, the negative impact of the US subprime mortgage crisis went beyond the financial field and began to spread to the economic fundamentals of western developed countries; The sharp decline in wealth and high inflation have weakened the world's consumption power; Anti-inflation austerity measures widely implemented in emerging economies have increased the risk of the world economy going down or even entering recession. Some people say that the bad situation of the world economy has just begun, not ended, while others pay insufficient attention to it. For example, the recent rebound in the exchange rate of the US dollar (which is also an influential factor leading to lower steel prices) is not due to the improvement of the US economy, but to the deterioration of the economies of the euro zone and Japan. Since the third quarter, the oil price in the international market has been adjusted at a high level, reaching the mark of 100 USD/barrel, reflecting investors' worries about the world economic prospects. Affected by this, the external demand environment of China steel products, including direct export and indirect export, will be further tightened.
On the other hand, while the world economy continues to slow down, China's domestic economic growth is also facing the dual pressures of cyclical adjustment and structural adjustment, showing a trend of continuous slowdown. It is estimated that the national economic growth will slow down to single digits in the second half of this year, and it is likely to continue to slow down in 2009. Therefore, there is a fierce debate about whether to change the tight monetary policy in the early stage, and there has been a macro-control orientation to ensure economic growth.
For the three pillars of steel consumption, although macro-control has been adjusted, its effect is still lagging behind. At present, we will face the inertial influence of sustained economic slowdown and slowing demand. For example, the wait-and-see atmosphere in the residential market is still strong, and it is expected that the national residential prices will inevitably fall, which will have a significant impact on real estate construction and domestic construction steel consumption for a period of time; Poor residential sales, household appliances and metal kitchen utensils are also sluggish; Car sales will continue to be weak, and some people think that 2009 will be the most difficult year for China cars. In addition, after 10, outdoor construction in the northern region decreased as the weather gradually turned cold, which was not conducive to the start of building steel consumption.
Affected by this, China's steel consumption demand will continue to slow down in the next stage, the relationship between supply and demand will tend to be loose, and even overproduction will occur, and the competitive sales in the market will become more intense, and the rise in steel prices will be greatly suppressed. In the absence of major accidents, the market will be dominated by weak operation.
Some people believe that the price and production cost of steel mills in the early stage have been upside down. Due to the support of high cost, steel prices must also stop falling and pick up. This view is not comprehensive. In fact, the cost support point of steel price can be changed. The price increase of iron ore, coke, scrap steel and other smelting materials can not only push up the price of steel, but also the decline of steel prices can react on the price of smelting materials, forcing them to go down, which is what we often call "reversal". This negative cycle, which falls in turn, rises in turn just like the previous bull market cycle. This situation has happened many times in history. Or the phrase "if the skin doesn't exist, the hair will be attached"? It is impossible for downstream final consumer goods sales to be weak and prices to fall, while upstream smelting materials have been firm and rising in the opposite direction. Therefore, with the decline in steel prices and the decline in the growth momentum of crude steel output, the demand for smelting raw materials such as iron ore and coke will also weaken, resulting in lower prices. This will be the next domino, but it's only a matter of time before it is transmitted. This situation has already appeared. In this way, the lower the price of smelting raw materials, the lower the support point of steel production cost, which will open up a new space for the further decline of steel prices. If we say that China's first wave of force to pierce the steel price bubble is due to the weakening of demand growth; Then, the power of the latter wave of decline will come from the lower price of smelting materials, that is, the lower support point of steel production costs. The latter will open more space for a new round of steel price decline. This needs our great attention.
According to market monitoring data, the price of crude oil in the international market has fallen by more than 30% in recent months, and some people think that the price of crude oil will fall below 100 USD/barrel in the future. The spot price of iron ore also fell sharply. The price in early September has dropped by about 65,438+05% compared with the peak in April, which is close to the CIF price of Xie Chang Mine. Affected by many factors, especially the continuous decline in international shipping costs, it is expected that domestic iron ore prices will still have some room to fall. It is estimated that the price of coke also feels the "high-altitude chill". The biggest question now is whether the price of Xie Chang mine will continue to rise in 2009. Recently, the world's mining giants are making a big fuss about the rise in iron ore prices. One of the arguments is that China will build 50,000 skyscrapers in the next few years. I want to know where these data come from. In fact, the global demand for steel, including China, has slowed down, the world shipping capacity is overcapacity, and the fuel price has fallen sharply, which makes the demand for price increase of the world's mining giants lose its foundation. The key now is that domestic steel prices must not "rise in vain" in the fourth quarter, giving the world's mining giants an excuse to substantially raise iron ore prices and "make wedding clothes for others".
With the collective slowdown of world economic growth and the relocation of global processing and manufacturing industries, it is expected that the growth momentum of global trade volume will also slow down in the future, and the volume of bulk commodities shipped by sea will also slow down accordingly, which will lead to excess international shipping capacity, and due to the decline of fuel prices, international shipping prices will inevitably fall. Affected by it, the logistics costs of iron ore and steel will also drop more, which will curb the continuous rise of steel prices on the other hand.
Third, we should be mentally prepared to "live a tight life"
It can be seen that due to the sustained economic slowdown at home and abroad, the sales of housing, automobiles and household appliances are weak, the support point of steel production costs is moving down, and the domestic steel production capacity is expanding, which will greatly curb the future domestic steel price increase. Don't expect too much from this. Iron and steel production enterprises and traders should have a sense of risk and be prepared for "living a tight life".
For steel trading enterprises (including investors and operators in futures and electronic trading markets), the business strategy should be fast-forward and fast-out. Although the steel price has dropped obviously, from many factors, especially the great uncertainty of the external economic environment, the steel price is still a high-risk price at this stage, and the possibility of sudden "diving" after the market rebound cannot be ruled out, resulting in a large number of stocks and goods on the way. Therefore, in terms of business strategy, we should try to fast-forward and fast-out, and we should not hoard a lot and wait for further price increases.
For steel production enterprises, it is necessary to overcome the investment impulse. According to statistics, stimulated by high prices and excess profits, the investment in China's iron and steel industry has obviously accelerated for a period of time. According to statistics, in the first half of 2008, the national ferrous metal smelting and rolling processing industry actually completed the investment of13.44 billion yuan, up 23% year-on-year, up 65.438+00 percentage points over the same period of last year, the highest growth level in three years. In July and August, the investment level of the steel industry continued to be high. Therefore, we must overcome the investment impulse, prevent the greater expansion of excess capacity, prepare for the weak consumption cycle that will come sooner or later, and avoid more excess capacity of Sinosteel and the vicious competitive sales caused by it. Isn't it the same in history?
Finally, prepare enough funds. Practice has proved that "cash is king" in a tight market environment. The ultimate goal of taking the above measures is to ensure that iron and steel production and operation enterprises have enough cash in their hands, ensure the good liquidity of funds, and avoid a large amount of funds being trapped by excess capacity and rapidly shrinking high-priced inventory, thus falling into the dilemma of capital chain fracture. In addition, iron and steel production and operation enterprises should also reduce the financial pressure, prepare the necessary cash, especially reduce the debt ratio, avoid excessive dependence on bank loans, and always be prepared to "live a tight life." Otherwise, the financial difficulties of the real estate industry today will reappear in the steel industry.
Any economic and market contraction means the reshuffle, merger and reorganization of the industry, which means the greater development of some enterprises. Because "winter" must be followed by "spring". But who can survive "winter" and develop in "spring"? The key lies in who has made all the preparations for "winter cotton-padded clothes" and "living a tight life" in advance, especially the financial preparation.