Steel industry: prices have fallen back and inventory continues to decline

Domestic steel prices: steel prices fell this week, and market transactions also declined: the number of Shanghai snail terminal purchases by Xiben decreased by 24.42%. The price of long products with the highest increase in the previous period fell sharply: rebar and wire fell by 1.6% and 1.3% respectively on a week-on-week basis. On the sheet side, hot-rolled and medium-sized plates fell by about 0.7%, and the cold-rolled decline was only 0.4%. Futures: Rebar futures rose 0.1%; wire futures rose 0.3%. Oriented silicon steel was flat with last week, and non-oriented silicon steel rose slightly by 0.6%; stainless steel prices fell by about 1%. According to Mysteel's survey, the consolidation view dominates.

International steel prices: International market prices have been steadily lower this week, with German plates falling by around 2% and South Korean market prices rebounding slightly. The CRU international steel price index was 173.4, which was the same as last week and down 2.4% from the previous month. It is worth noting that scrap prices, which have been falling for one month in the previous period, rebounded slightly by US$5/ton for the third consecutive week. Lower international crude steel capacity utilization means a downturn in international steel demand: US crude steel weekly production fell for eight consecutive weeks, capacity utilization fell to 66.7%, Europe less than 77%, only Japan, South Korea and other Asian countries The utilization rate has recovered to about 90% before the financial crisis.

Raw materials: The price of ore is stronger than the price of steel: Tangshan mine price continues to rise by 1%, Indian mine CIF price remains unchanged, Platts index in the first quarter of 2011, 62% of the price of fine ore 157 US dollars / ton, compared with last week It rose 2.6%, compared with spot discount of 6.5 US dollars / ton; Western Australia to Beilun port freight fell 4%, Brazil to Beilun port freight fell 0.1%, BDI index fell 6.8%. The prices of coke, scrap and pig iron are basically unchanged. In the short-term, during the sensitive period of iron ore negotiations, miners may moderately control shipments to keep prices high, and from the next year, ore prices will gradually fall.

Profit trend: The gross profit per ton of steel this week has declined overall. From the perspective of cost changes, after considering the inventory cycle, the cost of spot and intermediate steel mills increased by RMB 35/ton, and the cost of Changxie mill decreased by RMB 5/ton. Because the price generally fell, the gross profit per ton of spot and intermediate steel mills decreased by 54~100 yuan/ton, and the gross profit of Changxie Steel Plant in addition to long products decreased by 15~25 yuan/ton. If we do not consider the inventory cycle, because the steel price fell this week and the price of the mine rose, the gross profit per ton of each steel mill fell by 29~87 yuan/ton. (detailed definitions and assumptions see the text)

Inventory: Long-term stocks fell 13% in the first two weeks, with 1.6% down this week, with wire stocks down 1.8% and rebar stocks down 1.56%. In the past three months, longs stocks fell 25%, while sheet stocks instead It has risen by 3%. The rapid decline in inventory corresponds to a higher price increase in the long product market. Overall, the national steel social inventory decreased by 1.2% from the previous week, of which the sheet metal decreased by 0.95%. From a historical perspective, in October and November, where demand is relatively high, it is the best time to reduce inventory. After entering the winter in December, inventory will enter a new round of rising cycle.

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