Why is the billet price always strong?

SMM Network News: since 2020, the overall performance of billet prices is strong. Affected by public health events in the early stage, billet prices once fell to a low of 3000 yuan / ton. With the gradual recovery of downstream terminal demand, billet prices rose as a whole, especially after April, billet prices rose steadily and gradually stabilized at more than 3400 yuan / ton. Why billet prices have been strong, the overall resilience is strong, Futures Daily reporter to take you to find out.

The price of upstream raw materials has increased by 38.68%. Billet cost has been strongly supported.

Industry insiders told reporters that from the perspective of raw material prices, in the black industry chain since the beginning of this year, the price of upstream raw materials has been strong. As we all know, the degree of external dependence of iron ore in China is as high as more than 90%. Therefore, the change of ore price has an obvious impact on black products. Ore prices have continued to rise since the beginning of the year. up to now, taking Jingtang Port PB powder as an example, the current port spot price is 950 yuan / ton, an increase of 38.68% over the beginning of the year, while the billet price has increased by only 3.33%. From the point of view of the difference between high and low prices, the high and low price difference of foreign ore prices during the year was 340 yuan / ton, with a fluctuation range of 55.74%, and the high and low price difference of billet prices during the year was 440 yuan / ton. The fluctuation range is 14.67%. The increase in the price of raw materials is much higher than that of the billet itself.

It is understood that the current Tangshan billet cost is 3353 yuan / ton, compared with the same day billet price 3410, the profit is 57 yuan / ton, the profit space has been compressed obviously. At present, the billet cost of Tangshan Steel is between 3020 Mill 3170 yuan / ton, and the profit is still 300 yuan / ton, but this is mainly because the steel enterprises still use low-priced ore in the early stage, and the high-priced mine has not yet been put into the furnace, so there is a difference between the theoretical cost and the actual cost. in the long run, it is a high probability event that the ore price will remain strong in the later stage, as the procurement rhythm advances, the billet profit space may be obviously squeezed. "at present, the billet price has a strong support of cost, and the space for the price to fall in the later stage is limited, and as the cost rises, the billet bottom price is gradually rammed." Industry insiders say.

The supply of take-out billet itself is rising rapidly, and the imported billet is still difficult to make up for the gap.

The reporter found that the overall output of billet has increased, and the delivery of takeout is still tight. Since the beginning of this year, the blast furnace operating rate of domestic steel enterprises has been at a high level, and crude steel output has been increasing continuously. According to the data of the National Bureau of Statistics, China's crude steel output from January to July totaled 595.93 million tons, an increase of 3.97 percent over the same period last year. In terms of takeout volume, the national billet takeout volume from January to July totaled 21.65 million tons, a decrease of 13.47 percent over the same period last year. In particular, since the end of June, the production capacity of some steel enterprises in Xuzhou has withdrawn, the layout of the new production line of Shanxi steel enterprises has developed, the delivery volume of billet has decreased obviously, and the regional price difference of billet has been reduced obviously, so it is difficult to form a long-distance circulation. most of them are peripheral circulation, and the first billet is difficult to be collected from time to time.

In addition, there is a large influx of imported billets, but there is still a shortage in the supply of billet takeout. Due to the global spread of public health events, the foreign steel industry has been hard hit, while the strong domestic billet prices have led to the influx of imported billets, mostly from the CIS, Southeast Asia, Turkey, India and other surrounding areas. According to customs data, the total amount of domestic imported billets from January to June totaled 5.537 million tons, an increase of 5.03 million tons over the same period last year, and most of them were sold in Jiangyin Port in the early stage. with the adjustment of price differences, some imported resources have sprung up in Caofeidian Port, but due to regional circulation restrictions, the overall supply of billet takeout resources is still tight, and the short-term gap is difficult to make up.

The demand for billets in the lower reaches increases significantly by relaxing the frequency of production restrictions.

The reporter learned from business people that since the beginning of this year, the production restriction policy has been slightly looser than last year, and the overall start-up time of billet enterprises is higher than that of last year. Before June, the production limit time of billet blending enterprises was relatively short, although the profit differentiation of billet blending enterprises was obvious, the profit of billet steel strip was more than 100 yuan, and the profit of billet screw and profile was Weibo, but the enterprise exchanged price with quantity and maintained normal operation. Since June, the influence of production restriction of billet blending enterprises has increased, but due to the strong billet price, a small amount of billet is still collected rhythmically on demand, and at present, the purchasing mode of billet is more flexible, the long-term spot operation is increased, and the risk is more flexible. prepare sufficient billets for later production.

From the point of view of people in the industry, the overall price of billet is relatively strong, mainly due to the support of raw materials, and the tight balance between supply and demand of billet itself, and the billet price is stronger as a whole. In the second half of the year, the tight balance of billet supply and demand may continue, the ore price is strong and firm, and the overall drop resistance of the billet is still there. At the same time, because the billet itself has strong financial attributes and is an adjustable product, it is obviously affected by the international environment and the performance of downstream finished products. Overall, the overall performance of billet prices will be stronger in the future, which will be adjusted slightly by the billet price difference.

Click to understand and sign up for the 2020 China Automotive New Materials Application Summit Forum.

Scan the QR code above to view the business cards of the participating companies and sign up online

Scan the QR code and apply to join the SMM Automotive Industry Exchange Group.