Media reports
Steel Prices will Face Greater Pressure of Call-backs
【Time:2016-03-31 11:18】 【Traffic:
The first quarter of this year particularly in March,steel price's going much higher greatly boosted market confidence. Reasons of this rice are as following:
 
1, The steel industry revolutions and the State Department's policy of  resolving the overcapacity ,resources and market supply. manufacturers well expected to the supply stress of steel in the future.In "Thirteen Five" period Chinese iron and steel industry need to achieve 1.5 million tons of excess capacity target, so that the steel industry capacity utilization recovered to more than 75% relative to a reasonable level. Government work report further stressed the need to promote supply-side structural reforms to produce clear requirements and measures energy and increase environmental pressure Forced clearing excess capacity.
 
2, The domestic steel market remaining "Low inventory" badly lead to shortage of some varieties of specification. Compared with steel inventory levels in the years before and after the Spring Festival, the inventory levels of society after the Spring Festival in 2016 is much lower than previous years, and the inventory cycle and rising rates are low, low social inventory rebound in steel prices form a strong support. According to monitoring data show that as of March 18, 29 key cities in the social stock of 10.56 million tons, has dropped for two consecutive weeks, compared with March 11 the highest point of reducing 456,000 tons. Before and after the 2016 Spring Festival period inventories rose only lasted seven weeks, compared with 2013--2015 Spring Festival decrease 4-6 weeks; inventory increment of 3.197 million tons, an increase of only 41.5%, compared with 2013--2015 Chinese New Year growth rate fell 11.5-35.5 percentage points.
 
3, the yield of mandatory emission reduction measures in Tangshan World Park will be operational nearly six months, forcely taking control of emission reduction measures . Tangshan World Park starts from April 29 to October 16 lasting almost 171 days; during the opening ceremony, fairs, anniversary of Tangshan earthquake 40th year, Hundred Flowers Awards ceremony, closing ceremonies for up to 33 days when major events held, it will takecompulsory measures to reduce emissions. It is estimated that, if calculated according to the case of limited production of 50%, crude steel production in 33 days, affected nerly 400 million tons.
 
 
4, The proactive fiscal policy combined with "sound a bit loose" monetary policy, infrastructure investment is expected to smooth the good, the central bank issued eight ministries to strengthen financial support for industrial growth, more important is the formation of positive expectations funding industrial economy. 2016 Central deficit of 2.18 trillion yuan, an increase of 560 billion yuan more than in 2015, the deficit rate to 3%, up 0.7 percentage points compared to 2015; a moderate expansion of the government deficit is mainly used for tax cuts reduce costs, further reduce business burden, stimulate the economy of endogenous motivation. The increased investment in infrastructure has become a steady growth in recent years weapon Development and Reform Commission approved a total of 2015 approved 280 investment projects in fixed assets, a total investment of 2.5159 trillion yuan, of which 104 transport infrastructure projects with a total investment of 1.3309 trillion yuan, accounting for fixed assets investment 52.9% of the total project. 2016 infrastructure investment is still expected to become the main driving force of economic growth in 2016 China plans to invest 80 billion yuan to complete the railway, highway invest 1.65 trillion yuan, will also carry out 20 major water conservancy, hydropower construction of nuclear power, UHV major projects, transmission, smart grid, oil and gas pipelines, urban rail transportation, infrastructure investment will continue to overweight drive moderately heavy volume of steel demand.
 
5, the ECB and the Fed easing and other countries overweight loose monetary policy caused international commodity prices boosted. Since January of this year, multi-country central banks overweight loose monetary policy, the ECB first appearance, the Bank of Japan announced that negative interest rates, the Fed is also March 16 announcement that the federal funds rate from 0.25 to 0.5% unchanged, which means the Fed to raise interest rates this year or to be predicted before 4 times reduced to 2 times; with the central banks or monetary policy of deepening conversion, international commodity markets and opt for the pre-shock break out strong dazzling performance.
 
Despite a significant increase in the first quarter of positive factors Accumulation of steel, but after numerous factors expected good digestion, market supply and demand fundamentals, or will return to the game. From to capacity, even to the completion of 1-1.5 million tons production target, but we have to recognize that productivity is not falling yields; Tangshan Shi Park will also speculation is difficult to support a rebound in steel prices; real estate and infrastructure brings demand is expected to improve, with the manufacturing boom of the decline in demand for steel caused weakness still appears weak. For steel trend of late, after the need to focus on rising steel prices led to resume production and exports is expected to weaken, the impact on supply and demand fundamentals brought.
 
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