After May, steel prices fluctuate several background factors

       This year, the steady trend of economic figures and the efforts of the country to stabilize the economy and increase infrastructure investment and construction, so that China's total demand for steel remains at a high level. In such a market supply and demand balance, whether to continue to capacity, or because of environmental shutdown and reduce production, will lead to steel prices rise. Ma Zhongpu, an expert in the famous steel market in China, believes that this is the law of market price formation, which cannot be simply attributed to artificial speculation, and summarizes the market background factors of the steel price rising rapidly after May this year.



First, in 2016, 60 million tons of iron and steel production capacity will be delayed, and this year it plans to produce 50 million tons of capacity, and has now completed 31 million 700 thousand tons. This does not mean that nearly 100 million tons of intermediate frequency capacity is closed. At present, China's actual iron and steel production capacity is less than 10 tons. After more than a year of iron and steel production capacity, steel overcapacity seriously eased the situation, optimizing the steel production capacity structure. According to the survey, Tangshan iron and steel enterprises capacity utilization of equipment has reached 85.79%, excluding the capacity to go out in 2016 after the blast furnace capacity utilization rate of about 94.97%. Iron and steel equipment needs to be overhauled, and the utilization rate of equipment in general is 80%, which is a better international level. In fact, iron and steel enterprises are basically full capacity production.



Two, fortunately, steel mills and steel traders learned lessons from high inventory in April. Since May, although the steel prices continue to rise, but the social stock of steel continues to fall, until today, the social stock has remained at a low level of about 8000000 tons. Low social stocks of steel is actually a safety barrier to control market risks. If the market price shocks after the rise, the general market purchasing downturn. If high inventory at this time, due to bad shipping, steel trade business generally markdowns. But the promotional effect is not good, it will cause panic, competition and price drop.



Low inventory status will not appear steel prices continue to fall trend, only after the price rise, deduce the price of small fluctuations, so as to usher in a new market consumption balance. From the steel price trend can be seen clearly, since May this year although the price after a few times a slight concussion, but there is no price decline trend, which indicates that the low social security barrier is not only the stock market risk, but also to let the market have to seize the opportunity, pull the high price of vitality.



Three is the price of steel after one year and 7 months of continuous rise, construction steel business good profit has exceeded 1200 yuan per ton. In this capacity and profitability conditions in economic stability, steel demand is relatively stable under the conditions of iron and steel enterprises can do to balance supply and demand and market resources, which established a balance between supply and demand for high reliable and stable operation of the market price of resources.



It is in this context, the government continues to dominate to capacity, especially the state environmental protection department and the Hebei provincial Environmental Protection Bureau announced the "Hebei province to deal with heavy pollution weather and heating season peak production special plan". At the same time, many places in the country have also come out because of environmental problems continue to shut down the enterprise information. News once again triggered a sharp rise in the price of steel market again.