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China Steel Market Situation In2018 Can Be Summarized As Three Key Words.
- Dec 27, 2017 -

China steel market situation in2018 can be summarized as three key words.

First, growth

According to the preliminary forecast, the indicators of China's steel market will continue to grow in 2018. Among them, the apparent consumption of crude steel in the country was about 800 million tons or above, an increase of about 5% over the previous year, and the actual demand growth was no less than 3%. The national crude steel output was about 860 million tons, an increase of about 3% Iron ore imports will reach 1.1 billion tons, an increase of about 5%; steel prices high, the annual average price increase of less than 3%; the steel industry to achieve profit growth of about 10%. In the new year, the various indicators of the steel market continued to grow. The reasons for the continued rapid growth of the domestic economy and the continued recovery of the world economy. Only when this environment is reversed, the growth trend of the various indicators in the steel market will change. Such as the financial crisis in 2008 and the weak demand that lasted for several years after the financial crisis. Therefore, the continued growth of key indicators will be the first "key word" for China's steel market in 2018.
Second, slow down

This is the second "keyword." The deceleration mentioned here is a drop in the rate of growth, not a decline in the absolute amount. It is estimated that the growth of key indicators of China's steel market will drop in all directions in 2018, of which the apparent growth of consumption of crude steel in the country will drop to 1 digit, a drop of at least 5 percentage points from the growth of the previous year; the growth of crude steel output will be almost " The price of iron ore dropped by more than 2 percentage points, or even "may be cut." The price of steel dropped sharply. The average price of steel in China is expected to increase by less than 3% in 2018. The growth rate of more than% narrowed significantly; while the profit growth of the iron and steel industry dropped sharply to within 20%, and some enterprises even realized negative profit growth.

In 2018, the growth rate of important indicators of China's steel market will drop in an all-round way. First, the macroeconomic environment will tighten. In 2018, the growth of the national economy may slow down again. In particular, the growth rate of infrastructure investment and real estate investment has obviously dropped. Second, because of the impact of increased base comparison. In 2017, the indicators of the steel market achieved a resumption of growth with a sharp increase in the comparison base.
For example, the main contract price of rebar futures has reached 3,800 yuan / ton, or even 4,000 yuan / ton, up more than 30% from the previous low, while in the new year, rebar futures prices can not rise again 30%; Similarly, Because the base of comparison is greatly increased, it is impossible for the apparent consumption of crude steel in China to double-digit growth by 2018, and it is even more unlikely that the profitability of the iron and steel enterprises will double again and multiply. Finally, the marginal effects of policy measures have weakened. In the past two years to go to excess capacity, especially the full ban of "ground steel", to promote the balance of supply and demand of steel in 2017 has played an important role in promoting the price rise. However, the effect of this policy will diminish over time. For example banned strip steel, initially suppressed a large number of backward supply of resources, both for the supply and demand, or the price of the market, have had a great impact. However, over the past few years, compared with the same period of last year, 2018 market supply will be "less" out of the "strip steel" produced in the first 6 months of 2017, the room for steel supply to continue to decline will not be as large as before, Marginal effects will gradually decay.

Third, shocks

In 2018, the price of steel in China rose by 3% or so, which means that the average price increase of the whole year does not mean that the market of steel products will be placid. In fact, the "Coaster" swings, which have appeared repeatedly in 2017, will also be repeated in the new year. The price of steel in 2018 is expected to fluctuate by more than 20%, or even 30%, especially in the futures market. In other words, suppose the average price of rebar in 2018 is 3800 yuan / ton, then the shock between high and low price will reach 1,000 yuan, which is a large shock amplitude.

In the new year, the steel market continued to fluctuate widely, mainly because of the "game" of different interests among steel market participants. Such as the global and local interests of the game, ironclad environmental protection and non-compliance emissions of the game to go to production and "stolen" game, long and short capital forces of the game, and so on. There is the existence of "black swan". For example, to go to domestic production and ban "strip steel" results can consolidate? Can Trump's big trillion dollar infrastructure plan be implemented? Whether oil prices will rise sharply because of geopolitics in the future, and so on.It is precisely because of the strength of the game between the two sides of the powerful, all-pervading search for speculation topics, so the supply side of the reform within the year, the excess capacity of steel to ban, "strip steel", will become the subject of speculation, will not disappear, of course, Speculation themes will not always appear in the same face, but constantly changing forms. For example, in the new year, going to the production capacity and banning the "strip steel" will appear in the form of prevention and resurgence, consolidation of capacity-to-productivity results, and new environmental inspection.

Because 2018 China's steel market conditions continue to fluctuate, "roller coaster" market interpretation of many, "mini-cycle" still. Therefore, the operating strategy is still "fast forward fast.(Lange expert Chen Ke new original article, please indicate the source)