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The policy is favorable to the steel industry, Q345C steel pipe prices will remain high

Date:2019-01-02    View:718      Tag:The policy is favorable to the steel industry, Q345C steel pipe prices will remain high

Since the beginning of this year, the steel industry has continued to deepen the supply-side structural reforms, strictly guard against the resurgence of “strip steel”, ensure that all high-polluting production capacity has withdrawn from the market, and strictly control new capacity according to environmental protection requirements, thereby promoting the overall development of the industry. Affected by the above macroeconomic policies, the price of Q345C steel pipes in thefirst half of the year remained at a high level in recent years, and the operating rate of blast furnaces in steel mills was relatively high.

  In the first half of this year, the overall price of steel products remained stable and rising. Taking steel pipes as an example, the steel pipes in the beginning of the year experienced a shock in the second quarter after a brief decline in prices in March. At the end of July, the average price of steel pipes reached 4,400 yuan/ton, which was about 200 yuan/ton higher than that at the end of June.

  Overall, the current Q345C steel pipe market prices continue to rise, up about 500 yuan / ton compared with the same period last year, the high-end products such as cold rolled coils, the factory tax-included price once reached 4,700 yuan / ton. There are two main reasons for the rise in steel prices: on the supply side, this year's environmental protection requirements are more stringent than last year, and the suppression of steel production, especially backward production capacity, is obvious. On the demand side, the downstream market demand for real estate and infrastructure exceeded expectations, and its growth trend will continue into the second half.

  In recent years, the state has vigorously promoted the structural reform of the steel supply side. Last year, the task of over 50 million tons of steel to complete capacity was exceeded. In the second half of last year, 140 million tons of “strip steel” was fully cleared, and the “2+26” cities in Beijing-Tianjin-Hebei and surrounding key areas started environmental protection and limited production during the heating season. On this basis, the northeast region has further strengthened its efforts in environmental protection and emission control this year to investigate and rectify iron and steel enterprises that are not in compliance with environmental protection.

  Such measures have enabled the effective production of quality products to be effectively utilized, filling the market space after the elimination of backward production capacity such as “strip steel” and further optimizing the market environment.

  While the supply side continues to exert force, downstream market demand is gradually released this year. Recently, the Politburo meeting released a loose signal, emphasizing the adoption of a moderate monetary policy, which is conducive to the future development of infrastructure projects and supports the steel market. In terms of real estate, the construction area, new construction area and land acquisition area of the first half of the year increased compared with the same period of last year, and the warming momentum was obvious. The output of some steel companies reached a record high, steel sales were very smooth, and downstream shipments and orders were in good condition.

  The downstream demand has improved and the Q345C steel pipe market has stabilized and rebounded. At present, the steel market consumes better, and there is a certain differentiation between different products. The growth in demand for real estate has driven the consumption of steel for construction to exceed expectations, and the consumption of plate has gradually slowed down, but it is still at a historically high level. In comparison, the consumption of hot rolled coils, cold rolled coils and other plates is slightly flat, but it is currently in the traditional off-season of plate consumption, in line with seasonal trends.

  This year's infrastructure and real estate inertia demand is large, while oil and gas pipeline demand, shipbuilding orders rebound and new energy wind power and other orders increase, the downstream market demand for steel pipe diversification. In the second half of the year, domestic infrastructure demand will be concentrated in the central and western regions. It is expected that infrastructure investment will continue to support steel prices and steel companies' profit levels.

  Despite the existence of certain restrictions on production pressure, but driven by the rebound in profits, steel mills generally increase the operating rate of blast furnaces and ensure production through various means. According to the National Bureau of Statistics, in the first half of the year, symbiotic steel, crude steel and steel produced 373 million tons, 451 million tons and 531 million tons, up 0.5%, 6% and 6% respectively. In the context of limited production, steel mills can reduce the impact of limited production on production by adjusting the process flow, etc. The electric arc furnace capacity is also further released. Considering the statistical data, the actual steel production is expected to be lower than last year. Zeng, Q345C steel pipe market supply and demand maintained a relatively stable situation.

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