As the growth rate of the major steel industry continue to fall, the weak domestic market demand for steel. At the same time, the iron and steel production to maintain a high level, the steel market is still showing the oversupply situation, so steel prices continue to decline in May. China Steel Industry Association on the 19th report, taking into account the central government has dependable growth to establish the goal of austerity, it is expected that domestic demand is expected to continue to grow, but subject to the constraints of market supply and demand imbalance, steel prices difficult, has greatly improved, the late steel prices will continue low volatility trend.
Weak demand for domestic steel prices fell to 17 month low
Weak demand in the major steel industry, raw material prices decline, crude steel production is still a high level of case, domestic steel prices continue to fall in May. The latest data show that China Steel Industry Association CSPI composite steel price index, a decline of 3.67 points to 117.52 points, down 3.03%; compared with last year, down 18.41 points, a drop of 13.54%. Chinese steel prices index fell to its lowest level since 17 months, and March is lower than the same period last year, but with qoq slightly narrowed.
In May, domestic steel prices continued to show a by Week decline, the main varieties of the spot market price has declined, but the decline continued to narrow. Among them, the decline in long products is higher than the plate, the index was at 121.38 points and 115.44 points, a decline of 3.57% and 2.83% respectively. Monitoring of the main varieties, High Line, a larger decline in steel, the chain fell 4.52 percent and 4.46 percent. In addition, the hot rolled coil and plate drop and were down 2.95 percent and 3.96 percent.
Is not only a decline in domestic steel prices, the manufacturing growth rate down the impact of European and American countries, the international steel market prices in May the chain but also from up to down. Among them, the prices of long products remained stable, but the sheet metal prices come down significantly; compared with the same period last year, long, plates are more obvious. In addition, North America, Europe, market steel prices down as well, only a small section in the Asian market, steel prices have risen.
The manufacturing growth rate to continue down the market demand growth fatigue
From the recently published series of data, domestic and international manufacturing growth down as well, face greater pressure on the downstream steel demand growth. According to the National Bureau of Statistics, 1 May, the national investment in fixed assets, real estate development investment year-on-year increase of 20.1% and 18.5%, than the one in April, down. In the major steel industry, the growth rate of general equipment manufacturing industry, the automotive industry, railways and ships and other transportation equipment manufacturing, electrical machinery and electricity, heat production and supply industry and other major steel industry continued to decline.
The same period, China's manufacturing PMI was 50.4%, down 2.9 percent, including new orders and new export orders index is divided into 49.8% and 50.4% the previous month, down 4.7 percent and 1.8 percent. The steel industry growth rate continued to drop, weak growth of domestic market demand for steel.
It is worth noting that Europe and the United States and other developed economies, economic growth fell in May, the multi-national manufacturing index to fall, making the international steel market demand is also declining. China Steel Association report notes that, along with the slowdown in economic growth in European and American countries, the dual anti-friction in international trade is gradually increasing, the late steel exports difficulty will be to increase.
Lack of upward momentum post-Steel City will remain low volatility
Control objectives to complement the "steady growth", the state recently were launched, the number of the overall situation, led a strong infrastructure projects. At the same time, also arranged a 36.3 billion yuan of financial subsidies to promote the consumption of energy-saving appliances, automobiles and other products, and enhance the pulling effect of consumption on economic growth.
In addition, the central bank lowered the benchmark deposit and lending interest rates on June 8. Preset tuning will be carried out by the national policy level to promote stable and rapid development of China's economic, domestic steel demand is expected to continue growing with the expansion of domestic demand and implementation of the policy.
Crude steel output for four consecutive months qoq, the May decline, but still higher than the average of the first four months. Bureau of Statistics, the national crude steel in May the average daily production level of 1,975,300 tons, a decline of 43,700 tons, a decline of 2.16%. Moreover, 1 in May, the steel industry fixed assets total investment of 204.4 billion yuan, an increase of 11.7%. While over the same period the average daily crude steel apparent consumption was 1.8421 million tons, a decrease of 52,100 tons chain. In case of further slowdown of demand growth in the domestic market, steel production remain high, and the release of new capacity faster oversupply of steel market has not improved, and more intense competition of product homogeneity.
Taking into account China's economic growth rate to fall, but still higher than the rest of the world's major economies, coupled with the central to the "steady growth" on the macro-control is more important position situation, it is expected that the latter part of the domestic market demand is expected to continue growth. But by the constraints of the market oversupply, the price of steel is difficult to substantially increase, will still showed a trend of low volatility.
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