Steel prices continue to soar, the Ministry of industry and information technolo

China Iron and Steel Industry Association organized a policy declaration and implementation meeting on steel capacity replacement in Nanjing on May 25, according to the China Steel Association.
Lvguixin, a first-level inspector of the raw materials industry division of the Ministry of industry and information technology, pointed out that the newly revised implementation measures for the replacement of steel industry capacity will be implemented formally from June 1. This is an important document to promote the elimination of excess capacity and standardize the capacity replacement by market-oriented and legal measures. The author also puts forward the suggestions: the current rise and fall of steel prices have a great impact on downstream industries, Steel prices continue to rise sharply, and the fundamentals are not supported and policies do not allow. The replacement procedures shall be strictly implemented, the replacement audit shall be done carefully, and the implementation of capacity replacement shall be standardized.
Since May, the rapid rise of steel prices has attracted many concerns, which often occurs two or three times a day, even five or six price increases in a day, and some regions can rise more than 500 yuan in the highest day.
According to CCTV finance and economics, by the middle of May, the average price of steel per ton of eight major varieties in the national steel market has exceeded 6600 yuan, nearly 400 yuan higher than the highest level of 6200 yuan in 2008, up 2800 yuan compared with the same period last year, with a year-on-year growth of 75%. In the interview, reporters found that the price of steel and domestic prices are rising in parallel with the international steel price, and the increase is far higher than the domestic steel price.
According to the data of the world iron and Steel Association, the price of hot rolled rolled plates in the Midwest steel mills in the United States was 1644 US dollars, equivalent to 10570 yuan / ton, 4800 yuan higher than that of China market, while that of European Union Germany was 1226 US dollars, and 2116 yuan higher than that of China market.
According to the data provided by China Iron and Steel Industry Association, China's steel price index has risen 23.95% compared with the beginning of the year, while the international steel price index has risen 57.8% in the same period, and the price of steel in international market is significantly higher than that of domestic.
What is the reason for the rise in steel prices?
According to cctv.com, the data from China Iron and Steel Industry Association show that since this year, China's economy has been recovering steadily, with steel demand increasing significantly, including 49% of the growth in construction and 44% in manufacturing. In the international market, the global manufacturing PMI continued to improve, and in April, PMI reached 57.1%, which was more than 50% for 12 consecutive months.
The global economy has recovered and the consumption of steel in the world has been boosted. In the first quarter of this year, the growth rate of global crude steel production was from negative to positive, while 46 countries achieved positive growth, compared with only 14 countries last year. The World Steel Association statistics show that global crude steel production increased by 10% in the first quarter of this year.
When it comes to rising steel prices, there is a special reason for the epidemic. In 2020, in order to cope with the epidemic, various countries around the world have launched relevant stimulus policies to support economic development to varying degrees. Due to the currency overspread in the US dollar region and the euro area, inflation will intensify and transmit and radiate to the world, leading to the overall rise of global commodity prices, including steel.
Li Xinchuang, chief engineer of metallurgical industry planning and Research Institute, said that since march2020, the United States has launched super loose monetary policy, with a total of more than $5trillion of rescue plans put into the market, while the European Central Bank announced in late April that it would maintain ultra loose monetary policy to support the economic recovery. Under inflationary pressure, emerging countries have also begun to passively raise interest rates.
Affected by this, from February, the prices of global means of production such as grain, crude oil, gold, iron ore, copper, aluminum and other means of production have risen comprehensively. Taking iron ore as an example, on May 12, the CIF price of imported iron ore rose from $86.83/t last year to $230.59/t, an increase of 165.6%. Under the influence of iron ore price, the main raw materials of steel, including coking coal, coke and scrap steel, all rose, which further pushed up the production cost of steel.
China Steel Association said steel prices are difficult to keep rising sharply
According to the micro signal of China Iron and Steel Industry Association, on April 24, China Iron and Steel Industry Association issued a report that since April, steel prices have risen rapidly and significantly, so the steel industry in the downstream of shipbuilding and home appliances cannot bear the continuous high price consolidation, and the steel price in the later period is difficult to continue to rise sharply.
China Iron and Steel Industry Association said that in April, the domestic market steel demand was strong, steel prices continued to rise, and the increase was higher than last month. Since May, the steel price increase has increased further after May 1, but it has fallen sharply in the third week.
China Iron and Steel Industry Association expects that the domestic market steel price will rise significantly after May 1 Festival, which is affected by the increase of international commodity prices, loose global liquidity and high market expectations. In the later period, due to the expected decline and the increase of national supervision, the steel price is expected to stabilize gradually after adjustment.
According to the China Iron and Steel Industry Association, from the perspective of international market conditions, the price rise of this round is the result of the gradual recovery of the global economy, the strengthening of market expectations, the abundant liquidity and speculation. From the domestic market situation, there is no overall and trend change in both ends of steel products supply and demand, and the steel price does not have the basis for sustained and substantial increase. Affected by the policy and measures of "three red lines" and "two concentration" of land supply in the construction industry, and the south is about to enter the high temperature plum rain season, the infrastructure construction will slow down, as well as the shortage of automobile chips and the household appliances industry entering the off-season of production, the steel demand may be weakened, but the supply and demand are basically stable.
According to the statistics of China Iron and Steel Industry Association, in the early May, the daily production of crude steel (the same caliber) of steel enterprises increased by 0.75% on a month basis, and the output of crude steel in China was estimated to increase by 0.40% on a month basis. From the supply side, the work of "looking back" on the capacity of steel to be produced, reduction of crude steel output and environmental protection supervision are about to be carried out, and the output of crude steel in the later period is difficult to increase greatly. From the demand side, since April, steel prices have risen rapidly and significantly, so the steel industry in the downstream such as shipbuilding and household appliances cannot bear the continuous high price consolidation, and the steel price in the later period is difficult to continue to rise sharply.
China Iron and Steel Industry Association also said that steel inventory continued to decline due to the rapid growth of domestic market demand. In the early May, from the perspective of social inventory, the social inventory of 5 major steel varieties in 20 cities was 12.49 million tons, down 3.0% on a year-on-year basis, and fell by 16.6% in April.