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Up! Up! Up! Every day, 200 trucks line up to pick up the steel. Why is it so "just"?
Jul 16,2020 09:10CST
The content below was translated by Tencent automatically for reference.

SMM: according to the National Bureau of Statistics, China's crude steel output from January to May was 411.75 million tons, up 1.9 percent over the same period last year; steel output was 488.19 million tons, up 1.2 percent over the same period last year.

With the increase in national steel production, the main rebar contract has increased from 3100 points in April to more than 3700 points at present, an increase of more than 20% in three months.

Why is the rebar stronger? What is the trend of the iron and steel industry? The reporter visited many places.

Shanghai: the demand for rebar is booming and the price has risen for three months in a row.

At a construction site on Zhoujiazui Road in Shanghai, Zhang Wei, the site manager, told reporters that with the acceleration of the progress of the project, the amount of steel needed for construction was also gradually increasing, and he took out his daily records.

Zhang Wei, project site management of Shanghai Construction Engineering Seventh Construction Group: the current amount of steel bar can be reflected in the account, which is 60% more than that in March and April. In April, the amount of steel imported each time was maintained at about 10 tons, and now it has reached more than 20 tons and more than 30 tons.

The person in charge told the reporter that according to the production plan, their site will enter the construction phase of the structural project in August, and the steel consumption of the project will be increased several times, but the current rebar price has already exceeded that of the same period last year.

Huang Xuehua, project manager of Shanghai Construction Seventh Construction Group: the rebar price level in March and April was about 3600 yuan per ton, and the rebar market price has now almost reached 3900 yuan per ton. Last year, the price of steel was about 3800 yuan per ton. after the completion of the pile foundation project, it will mainly be structural construction in July and August, and the amount of steel used may be even greater, perhaps two to three hundred tons a day.

With the acceleration of the resumption of construction, the domestic manufacturing PMI in May was 50.6%, maintaining an expansion range, the growth rate of infrastructure investment also rose to 10.9% over the same period last year, and the demand for rebar market picked up rapidly, which also led to a sharp rise in rebar prices.

The main rebar contract fell to 3103 points in April and then rose all the way. as of July 13, the main rebar contract hit a year high of 3768 points, up more than 20 per cent in three months.

Ningbo: the shipments of steel traders have greatly increased. Every day, 200 trucks stand in line to pick up the goods.

With the development of downstream infrastructure, the volume and price of the steel market are on the rise. For steel traders, what are the changes in the overall market this year? How is the steel inventory digested?

Zhu Libo is the head of a steel trading company in Ningbo, Zhejiang Province, which mainly deals in rebar and spiral steel for construction. He told reporters that business has been good recently, downstream demand is strong, and the price of rebar has rebounded since May and has now returned to the level at the beginning of this year.

The steel products of Zhu Libo and a number of local traders are transferred through Ningbo Zhenhai Port Wharf and then stored in the warehouse in Zhenhai District.

The person in charge of a warehouse told the reporter that recently, steel stocks have dropped rapidly, with daily shipments of 5, 000 tons. The number of trucks queuing to pick up goods on weekdays can reach 200, and they are busy until 11:00 in the evening.

Truck driver in Ningbo, Zhejiang: two or three times a day in the first few months. Now I can run five or six times. Sometimes I need to queue here for two or three hours.

In addition to rebar, the hot-rolled and cold-rolled coil market is also picking up. Wang Yijun has been engaged in plate trade in Ningbo for more than 10 years. He told reporters that plate prices fluctuated greatly this year, with serious losses in the early stage. At its worst, it lost 400 to 500 yuan per ton, and now the demand has come up. Monthly shipments have also increased from 4,000 tons in March to 10,000 tons now.

Wang Yijun, general manager of Zhejiang Ningbo Rongzhiguan material Co., Ltd.: the price was high in January. Affected by the epidemic, it has been going down until April, and began to rebound in May. So far, it has reached the highest level in the first half of the year, with an increase of about 15.6%.

Wang Yijun's stock of 6,000 tons is stacked in a plate processing and warehousing company in Zhenhai District, where there are six production lines that cut and process semi-finished products produced by steel mills, all of which are currently operating at full capacity.

The person in charge told the reporter that at the beginning of the year, the cold-rolled coil in the warehouse was piled up with four layers, but now it is only two stories high, and the inventory level is at a low level in recent years.

Liu Hechao, general manager of Minmetals Steel Zhejiang Ningbo Industry and Trade Co., Ltd.: the current market demand, compared with the same period last year, is definitely low. But since February, the demand for downstream customers to pick up goods has been growing every month.

The reporter looked up the data and found that the social inventory of steel this year showed an inverted "V"-shaped trend.

As of July 10, the domestic social inventory of steel was 15.04 million tons, down 42.10% from the peak in mid-March, of which the social inventory of rebar and plate decreased by 42.74% and 32.21% respectively.

3 the rise in the price of raw materials squeezes the profits of steel companies, analysts say it may be too strong in the second half

As the upper reaches of the industrial chain, what are the changes in the costs and profits of iron and steel production enterprises? What will be the trend of steel prices in the second half of the year?

Ningbo Iron and Steel Co., Ltd. is a long-process steel production enterprise. there are two blast furnaces and a hot rolling production line in Beilun District, Ningbo, Zhejiang Province. the operating rate has been high since the Spring Festival.

The reporter learned that in steel production, the cost of iron ore and coal can reach 80% to 90%. Recently, the price of raw materials has been fluctuating upward.

Shen Jiankang, Minister of Iron and Steel Purchasing in Ningbo, Zhejiang: especially after entering June, according to the Platts (iron ore price) index, iron ore prices have risen to US $100 per ton and have not gone down so far, fluctuating at high levels. In the case of coal, it should be said that in the past six months, especially in the past few months, the price has also been high and relatively strong.

The person in charge told reporters that steel prices continued to decline in the first quarter, coupled with the rising prices of imported iron ore for raw materials, profits were double squeezed.

Since May, the market has picked up, and the upward rise in steel prices has brought a certain profit margin. Analysts believe that the current profit level of steel enterprises is showing a trend of differentiation.

Ma Jinlong, chief analyst of the steel industry of Tianfeng Securities Research Institute: at present, the profit per ton of steel is best still rebar, but the level of profit is really not high in terms of absolute value, basically at the low level in the past three years.

According to the data, in the first five months of this year, the country's crude steel output was 412 million tons, up 1.9 percent from last year; pig iron output was 356 million tons, up 1.5 percent from last year; and steel production was 488 million tons, up 1.2 percent over the same period last year.

Industry insiders said that the gradual release of production capacity can dilute the costs of iron and steel enterprises, and there is still some room for steel prices to rise under the pull of infrastructure in the second half of the year.

Ma Jinlong, chief analyst of the iron and steel industry of Tianfeng Securities Research Institute: we think that steel prices should be on the strong side in the second half of the year, and we need to emphasize that because of seasonal effects, the fundamentals of short-term supply and demand are still a little weak. This must wait until the whole rainy season has passed before it may be more prominent.

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