Multi - factor boost steel prices continue to go up

Affected by the outbreak of winter rush demand, coke price increase, scrap steel and iron ore cost line moving up and other factors, superimposed with Tangshan as a representative of part of the environmental tightening, steel prices continue to go up recently.

Iron ore prices moved higher

November 2 solstice November 6, domestic key city steel inventory 1100.19 million tons, than the previous period (October 26 solstice October 30) 641,300 tons, a weekly decline of 5.51%.Among them, the construction steel inventory 6.2461 million tons, than the previous 6047 million tons, a weekly decline of 8.83%.In terms of steel mills, taking construction steel as an example, affected by the continuous release of demand and the decline in output, the recent inventory of steel mills has all dropped. On November 6, the inventory of steel mills in the main regions of the country was 4.493 million tons, down 10% from the previous month.

Prices for iron ore, the steel industry's main raw material, have remained high this year.The reason is that Brazil and Australia, as major iron ore exporting countries, have suffered from a severe epidemic, which greatly affected the production and export of iron ore. As a result, the iron ore port inventory has been greatly reduced and the supply has been less than the demand, and the iron ore price has been rising all the way.

The price of iron ore imported into China jumped to a six-year high of $128.9 a tonne in mid-September, according to agency monitoring data.Recently, iron ore prices have been fluctuating between $110 and $120 a tonne.

Wang Yingsheng, deputy secretary general of the China Iron and Steel Association, pointed out that demand from China has actually made an important contribution to the global steel industry and has been an important support for many mills to stay in business.At the same time, the long-agreed pricing mechanism for iron ore has left downstream steelmakers with little bargaining power.In addition, almost all steel products can be traded in the futures market, the financial market speculation will also play a role in the price of iron ore.

Short-term steel prices are expected to continue to rise

Industry insiders point out that the explosion of winter rush demand is the main logic driving prices higher.In addition, the sixth round of price increase caused by coke production reduction, the cost line of scrap steel and iron ore moving up, with Tangshan as the representative of some areas to become more stringent environmental protection is the main reason for the steel price rise.

In the near future, some steel rolling enterprises will stop production for another 4 to 6 days. By the end of the year, the relocation of tangshan and surrounding enterprises will affect 2.74 million tons of production capacity. Multiple factors will have a superimposed effect to stimulate the market growth potential.In the short term, influenced by cost support, rapid destocking process and environmental protection, steel prices are expected to continue to rise.

The current need to pay attention to the pace of inventory changes, if the inventory continues to drop significantly, steel prices will remain high within a month strong shock trend.However, there is a greater risk of steel prices falling in December and January this year. We suggest that we gradually reduce the inventory level to prevent and control the risk.