History has never changed, history is only repeated, and many future answers are in history. If you understand history, you will understand the future.
Review the steel price trend in 2021, a thrilling roller coaster game. In the first half of the year, the country proposed carbon neutrality , carbon peak and reduced crude steel production capacity, coupled with the expectation of the issuance of local special bonds in the second half of the year, the steel market ushered in a sharp rise in recent years. With the sharp rise in the price of commodity in the second half of the year, the cost of downstream industrial chains increased significantly. In addition, the "coal shortage" has led to frequent electricity restrictions in various places. Against the backdrop of a series of policy interventions such as national supply guarantee and price stabilization, commodity prices have been falling all the way.
The ups and downs of steel prices in 2021
I saw him get up the red building, he was greeting guests, and he was watching his building collapse. This sentence comes from " Peach Blossom Fan ", which talks about the rise and fall of the late Ming Dynasty. But it is also suitable for use elsewhere. For example, the surge and plummeting steel prices in May and October 2021 were thrilling and ups and downs.
data shows that steel prices hit a record high in May 2021. After the State Council meeting on May 12, the country named commodities overheating for three times. rebar fell sharply from 6,200 yuan/ton to 4,600 yuan/ton in three weeks. At the critical moment when black commodities choose the direction of rise and fall at this position, thermal coal has made its debut.
After breaking the previous high of 600 yuan/ton, the main thermal coal contract has risen to 1,408 yuan/ton before the National Day. After the strong rise, coke and coking coal prices have also broken historical records repeatedly. After the National Day, power plants lost power generation due to the surge in coal prices in many places across the country, and began to shut down power limits. On October 19, thermal coal staged a "last madness", and the main contract rose to 1,982 yuan/ton, approaching the 2,000 yuan/ton mark.
The strong rise in thermal coal has driven the rise in steel raw material prices. The domestic large-scale power limit expectations have made the bulls in the steel futures market fearless. After the plunge in May, the rebar futures price once again rose above 5,800 yuan on October 11.
At this time, the surge in thermal coal prices has seriously affected the national economy and people's livelihood. The country has taken heavy measures to ensure the supply and price stability of coal, and has suppressed coal prices unprecedentedly and has risen to the legal level. The price of thermal coal fell from 1982 yuan/ton on October 19 to 841 yuan/ton on November 2, falling more than 1,100 points in 11 trading days. The price of thermal coal fell sharply, and coke and coke will naturally follow the decline. With the introduction of the property tax pilot policy, rebar, hot coil , iron ore, etc. further fell sharply. The entire black commodity collapsed. Data shows that the price of rebar futures fell sharply from 5,800 yuan/ton to the lowest point of 4,000 yuan/ton within one month, which is a terrible sight.
Confidence in steel prices collapsed in 2022
In fact, the decline in the steel market had already appeared as early as the second half of 2021. Although the downward pressure on the economy increased and downstream demand fell sharply at that time, under the dual pressure of reducing crude steel production and "double control" of energy consumption, the steel supply side contracted even more. The average daily output of crude steel fell by 540,000 tons compared with the first half of 2021, a decrease of 17.3%, becoming an important factor driving the sharp rise in steel prices in the third quarter of 2021.
From late October to mid-November, under the influence of negative factors such as weak market demand, tightening the country's control over commodity prices and shifting from US monetary policy, steel prices once again fell sharply by more than 1,000 yuan per ton. Afterwards, under the influence of environmental protection production restrictions in autumn and winter, environmental protection production restrictions in Beijing Winter Olympics and Paralympics, the steel supply side shrank again, and steel prices fluctuated and rebounded. By March and April 2022, the Russian-Ukrainian conflict and the severe domestic epidemic prevention and control situation will have an impact on the economy. The strong policy stimulus expectations caused by this have become the main factors supporting the continued strengthening of steel prices while supply rebounds rapidly.
However, as strong expectations quickly transform to weak reality, steel inventory has increased rapidly, coupled with Federal Reserve Radical hike rate hike balance sheet shrinking hit the capital market, and steel prices finally returned to reality, and have fallen by nearly 1,500 yuan/ton since May this year. In particular, the price of hot-rolled coils has fallen back to the level in June 2020, only about 400 yuan/ton left before the price low after the outbreak of the new crown pneumonia epidemic in Wuhan. Now the steel industry has once again reached the threshold of losses in the entire industry, with steel prices falling and market confidence falling again and again.
Judging from the changes in steel prices in the past year, every important change node is accompanied by the transformation of supply-side expansion and contraction state, and every contraction has an administrative "hand" at work, which brings about improvement in the industry's operation. Every expansion is a spontaneous disorderly behavior of the industry, which brings about deterioration in the market and even causes losses to the entire industry.
National Bureau of Statistics data shows that even in 2021, when the profits of the steel industry are at the best in history, the operating income profit margin of ferrous metal smelting and rolling processing industry was only 4.39%, while the operating income profit margin of industrial enterprises above designated size in the country was 6.81%, and the operating income profit margin of manufacturing industry was 6.53%, and the profit margin of the steel industry was still relatively low. Despite this, news such as "steel prices have risen sharply" and "steel industry profits have been seen on the Internet, and some downstream industries also criticize the steel industry. But in fact, the steel industry has not even reached its average profit level.
History is always in a continuous cycle. Will the market that plummeted last year be repeated in October this year? Zhang Hao, chief analyst of China Steel Network , said that there will be no market drop last year this year. The main reason is that the supply shortage of coking coal and coke was short of coke last year before the sharp drop last year, which led to the surge in the "double coke" price. From July last year to before the National Day holiday, there were hoarding and price gouging in the market. After the National Day, the country took heavy measures to ensure the supply and stabilize the price of coal, and the efforts to suppress coal prices were unprecedented, which also led to a crazy decline in steel prices at that time. Then this year's market is at a low level, coke futures prices remain around 2,000 yuan/ton, and steel prices fluctuate between 4,000 yuan/ton. Without a big rise, the probability of a big fall will not exist.
Hen 0Ren Xiangjun, executive vice president of Zhengzhou Steel Trade Chamber of Commerce, president of the Steel Pipe Branch, and chairman of Henan Avenue Zhijian Steel Co., Ltd., also held the same view. He said that last year's trend was to reverse the W trend, reaching the second wave of price peak in September, and it fell all the way since October, laying the groundwork for winter storage. However, since April this year, prices have not been boosted, but instead released a concentrated positive news in October.
Ren Xiangjun analyzed from the three levels of macro, raw materials and demand. He said that from the macro perspective, all the positive policies should be continuously continued, and the positive policies in the early stage will be concentrated in October. From the perspective of raw materials, coke plans to increase by 100 yuan before the holiday, and iron ore prices are supported to maintain stability. From the demand side, with the countdown of the policy of housing guarantee and payment, the positive effects on steel have emerged. At the time of the 20th National Congress, environmental protection production restrictions in the Beijing-Tianjin-Hebei region have intensified, and the peak production in the heating season has played a crucial role in the balance of supply and demand relations. Ren Xiangjun believes that the market trend in October this year is exactly the opposite trend from last year.
