Baosteel price cuts be regarded as reasonable things, the decline is also reasonable. "Wu Jin, Nanjing steel traders told the Securities Reporter, steel prices to weaken this year, I have to minimize inventory in order to reduce the loss."
June 11, the steel industry price benchmark enterprises, Baosteel announced price cuts of other products, in addition to the non-oriented electrical steel remain unchanged, the price reduction ranging from 100 yuan / ton -400 yuan / ton.
High crude steel production, inventory high multiple bearish factors, the overall continuation of the trend of the early fall of the domestic steel market since May. So, steel prices in the end is the situation bottomed out or will continue dropping? Become the biggest concern of June. Baosteel's price cut is undoubtedly clear the steel market continued to weaken prices.
The continuing weakness in steel market
Baosteel issued July price policy, down 200 yuan / ton, hot rolled pickling cut by 100 yuan / ton, general cold cq level is lowered to 200 yuan / ton, hot-dip galvanizing cq level, electro-galvanized cq level down to 100 yuan / down 300 yuan / ton, ton, galvanized, painted down 200 yuan / ton, non-oriented silicon steel is fixed, not including tax.
"Baosteel cut prices reasonable downstream slowdown in demand is the main reason." Wu Jin said, "by real estate continued to control effects of the slowdown in domestic demand, the European debt crisis led to decline in steel exports."
Baosteel one insider said to the reporter of the "Securities": "the ex-factory price of the company 4,5,6 three months of basic flat, while the market price during the same period fell by more than 15% down steel companies choose to July price, in a sense only counted Budie. "The data show that in addition to the March for the increase in the first six months of this year, Baosteel's pricing policy in general, others are flat.
By the high crude steel production and raw material prices marked decline in manufacturing pmi index was lower than expected, such as multiple negative factors affect the domestic steel market as a whole continuation of the trend of the early fell in May, the main varieties prices hit new lows for the year, the June is decline further.
"Securities" reporter noted, Anshan Steel, Wuhan Iron and Steel and other leading steel mills in June the majority of the price policy have chosen to lower prices, the biggest drop of the plate main varieties reached 200 yuan / ton. Among them, the individual steel mills of the River Steel, Nanjing Steel, Sha Steel and even on the May contract, making it up.
Three-quarter reversal opportunities
Gao Hua Securities researcher Xiehong He seems, due to overproduction, the weak demand, Baosteel announced down in July ex-factory price, which will steel prices puts further stress. At present, the steel market in the summer of slack demand, the supply surplus.
Xiehong He is expected this summer, the Chinese iron and steel enterprises to the inventory is slow, the situation is grim, three-quarter steel prices may continue to weaken. Small steel plant with production capacity based on our field research, profitability relatively good cash cost recovery is likely to remain operational; the same time, the loss of state-owned steel companies for social responsibility considerations (employment, support local economic growth and maintaining social stability, etc.) before in profitability will continue production. This means that the Chinese steel industry will continue to ignore the needs of vulnerable continue to over-production, and thus profit margins further suppressed.
Market analysts believe that no significant release of the premise of downstream demand, steel production is the best hope of steel prices continued to rebound. However, the "Securities" reporter in an interview that several large steel mills and the production plan.
Baosteel direct sales, downstream customers are industry leading manufacturer of good reputation, so the company's current production and sales and no major changes, just some adjustments in the price. "Baosteel sources mentioned above. While the the Shagang securities have also admitted that there is no cut notice.
Steel wholesalers clear inventory
Steel wholesale business orders from Sha Steel, Maanshan Steel and other   steel mills, and then sold to downstream customers of electricity, the construction industry. "Wu Jin admitted that" steel prices after the Spring Festival this year was up a wave after it has been sideways in a recession to make money in the steel wholesale, not easy. "
Order to reduce the risk from the beginning of this year, Wu Jin to take "pre-determined customer, re-order" strategy, sales of fixed purchase volume, minimize inventory. "Since April, steel prices unilateral down although I have zero inventory to reduce losses, but still faces the risk of loss."
I know, wholesalers, many are reducing inventory. Wholesalers' inventories of steel is relatively small, so the real pressure on the stock in the steel mills. "However, Wu Jin, also told the" Securities "Reporter:" because the high cost of support of the steel mills, so the back once again a substantial price reduction is impossible. "



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