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[SMM Analysis] where is the market of stainless steel against the wind in the second quarter in the second half of the year?
Jul 1,2019 16:21CST
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Source:SMM
The content below was translated by Tencent automatically for reference.

SMM7 18-month news: this year's stainless steel market can be described as "peak season is not prosperous, off-season is not so light", how to treat the current stainless steel industry? How will the future stainless steel market develop? SMM will combine the actual research and industry data to analyze the consumption of stainless steel in the first half of the year and the market forecast in the second half of the year.

Profit of stainless steel enterprise

According to SMM, the average profit of steel mills across the country in the first quarter of 2019 was about 260 yuan / ton, the best performance in early March, and the average weekly profit of 428 yuan / ton. As a result of a wave of rise in stainless steel after the Spring Festival, the short-term upward trend of three series prices was mainly driven by costs, and the demand for replenishment in the lower reaches stimulated the price of the 300series to go up all the way up, but after the rise was maintained for a week, it entered the downward channel, mainly because of the excessive growth rate of stainless steel. The actual demand did not rise synchronously, which led to the accumulation of stainless steel social inventory.

In April, the average loss of steel mills across the country expanded to 600 yuan per ton. At the beginning of May, the stainless steel plant opened a wave of joint price, but the downstream demand was limited, the market supply pressure of 300 series was greater, the price of 300 series continued to decline in the middle and late May, and the transaction of downstream demand became weaker and worse. At the end of May, some agents secretly dropped the goods based on the financial pressure at the end of the month.

In June, as a result of nickel prices rose, stainless steel prices reversed, after mid-June due to nickel prices rose, stainless steel prices all the way up, transactions slightly improved, the overall June transaction situation was flat in May, June off-season is not light.

7月初不锈钢弱势盘整,至中旬因镍价拉涨,截止7月17日,无锡地区304冷轧民营四尺基价报至14300元/吨,热轧报14250元/吨。 

(data source: SMM)

Stainless steel plant output

According to a survey by SMM, the national stainless steel output in June was 2.3449 million tons, down 2.34 percent from the previous month and up 23.73 percent from the same period last year. Separately, the output of the 300th series in June was 1.126 million tons, a decrease of 2.76% compared with the previous month. According to the SMM survey, the circular decrease in the output of the 300th series in March was mainly due to the reduction of 300series production in some steel mills due to costs and orders. The output of the 200 series was reduced by 2% to 883000 tons, mainly due to the maintenance of the South China Steel Plant. The output of the fourth series decreased by 1.95 per cent to 428500 tons compared with the previous month.

According to SMM statistics, the initial output in July was 2.5045 million tons, of which the output of the 200s increased by 5.44% to 931000 tons, 1.144 million tons of the 300s, 1.6% to 429500 tons of the 400s and 0.23% from the previous month.

 

(data source: SMM)

Terminal requirement

In the downstream consumption field of stainless steel, building materials decoration and machinery and equipment account for about 45%, household appliances account for about 8%, rail transit account for 8%, and catering appliances account for about 15%.

 

(data source: SMM)

Completed area of house

According to the website of the National Bureau of Statistics, in the first half of 2019, investment in real estate development nationwide was 6.1609 trillion yuan, an increase of 10.9 percent over the same period last year, down 0.3 percentage points from January to May, and the sales area of commercial housing was 757.86 million square meters, down 1.8 percent from the same period last year. The decline was 0.2 percentage points higher than in January-May. Of this total, the completed area of houses was 324.26 million square meters, down 12.7 percent, and the decline was expanded by 0.3 percentage points. Of this total, the completed area of housing was 229.29 million square meters, down 11.7 per cent. .

The cumulative growth rate of newly started and completed housing areas is as follows:

Growth rate of automobile and ship production:

The China Association of Automobile Industries recently released data on automobile production and marketing for June 2019. Although the overall decline of the industry has narrowed, but the overall decline in production and sales of the industry is still facing greater pressure, the national automobile production and sales has been down for 12 consecutive months, and is expected to show negative growth for the whole of this year. In June, car production and sales narrowed from a year earlier, with production and sales of 1.895 million and 2.056 million vehicles respectively, up 2.5 per cent and 7.5 per cent respectively from the previous month, down 3.9 and 6.8 percentage points from the previous month. From January to June, production and sales of cars were 12.132 million and 12.323 million respectively, down 13.7 per cent and 12.4 per cent respectively compared with the same period last year.

 

According to the latest data from the National Bureau of Statistics, the output of civil steel ships in June was 2.796 million deadweight tons, an increase of 7.4 percent over the same period last year. From January to June, the cumulative output of civilian steel ships was 16.259 million deadweight tons, an increase of 12.2 percent over the same period last year.

Investment in fixed assets:

From January to June 2019, national fixed asset investment (excluding farmers) totaled 29.91 trillion yuan, an increase of 5.8 percent over the same period last year, an increase of 0.2 percentage points over the period from January to May. In terms of month-on-month speed, fixed asset investment (excluding farmers) increased by 0.44% in June. Of this total, private fixed asset investment was 18.0289 trillion yuan, an increase of 5.7 percent over the same period last year, an increase of 0.4 percentage points over the period from January to May.

Of this total, infrastructure investment (excluding electricity, heat, gas and water production and supply) rose 4.1 per cent from a year earlier, 0.1 percentage points higher than in January-May. Of this total, investment in water conservancy management increased by 1.1 percent, down 1.8 percent from January to May; investment in public facilities management fell 0.3 percent, a decrease of 0.5 percentage points; investment in road transport increased by 8.1 percent, an increase of 1.9 percentage points; and investment in railway transport increased by 14.1 percent, down 1 percentage point.

 

Home appliances:

According to the National Bureau of Statistics, retail sales of household appliances and audio equipment totaled 439.2 billion yuan in January and June, an increase of 6.7 percent over the same period last year, while retail sales of household appliances and audio equipment totaled 96.3 billion yuan in June, an increase of 7.7 percent over the same period last year.

Online income growth in household air conditioners, refrigerators and washing machines (Ali channels):

Inventory

Seasonal inventory change of stainless steel:

 

(data source: industry data, SMM)

From the data over the years, stainless steel social inventory has seasonal accumulation and decline, but this year, due to the growth rate of stainless steel production is higher than the growth rate of downstream demand, the uncertainty of the macro environment, the peak season is not prosperous, the off-season is not light. The high and narrow range of stainless steel inventory fluctuated in the second quarter. At the end of June, the inventory in Foshan, Wuxi increased by 0.96 to 489000 tons compared with the end of May. In mid-July, the Wuxi area showed a small drop of 1 per cent. From the beginning of July to the middle of July, the actual transaction of stainless steel is relatively weak, traders do not build inventory, rigid demand to pick up goods, the decline is reflected in the actual arrival of steel mills reduced, or for the production of later cold rolling projects.

SMM believes that under the support of the raw materials, stainless steel prices are still supported, according to the traditional seasonal impact over the years, the end of the Meiyu season in late July in Jiangnan, the end of August end-user start-up rate, or stainless steel will bring a wave of demand boost, combined with this year's stainless steel market there is no obvious off-peak season, future order demand is still to be verified by the market.

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