Analysis of Current Market Situation in China(Ⅱ)

Release date:2016-07-21 Clicks:64 Font display:【Large】  【Medium】  【Small】

Last week, the future price of rebar rose up continually, which price was 2527 RMB/ton on Friday, increased by 82 RMB than last week and increased by 166 RMB than the lowest price this week. By the future price of steel rising, the spot price of steel is strong and shows rising trend around China and Construction steel products shows stronger especially. Though there is high temperature in the north area and continually rain in the south area, the spot price of steel is rising up actively under the situation of inventory resources not much and some size stock over

The key reason of why the future price of bulk stock especially steel products was so strong is people’s expectation about Monetary Easing Policy, the chief analyst said. The newest data indicates that China has increased new load of RMB 7530 billion in the first half year, which is more 967.1 billion than the same period last year. It provides motive power for all kinds of products price up on June that released currency increased and RMB devaluation continually. The past one month, all kinds of products future price was rising up and steel future price increased by 20 percent to 30 percent.

The chief analyst thought, from industry aspect, the steel production will be influenced by the big background of supply-side structural reform and all kinds of the policy of production limits released in Tangshan World Horticultural Exposition period. The speed of steel production released is down, so Chinese production of crude steel and pig iron reduced the first half year. At the same time, Baogang and Wugnag declared that they would reduce production and recombine; Chinese all provinces and cities insured the plan of reducing steel production and started to dismantle the related equipment. So the entirely market has a expectation that the future steel market provide increase will not go on. In addition, coal tar production sharp decrease made a strong steel price and strong steel cost.

Steel price up almost a month stimulated steel sell, so the stocks in mill were consumed quickly. At the end of June, Chinese steel association member enterprises’ stock reduced by 10 percent than the middle of a month and the whole social steel stock also reduced by 34 percent than last year. On the other hand, Chinese exported steel 57.12 million ton last first half year, increased by 9 percent and almost 5 million.

The chief analyst points, now loose monetary conditions will not change quickly and it will continue to support the bulk stock price. But, as the space that credit continues to expand is limited and RMB exchange rate almost reaches 6.7, the power of driving RMB to devalue is weak. There was no reduction of interest o the newest discussing interest meeting after United Kingdom back in Europe, which shows that the space of steel price up is becoming narrow by currency. It is possible for Chinese steel price to fluctuate in a high position. The price of steel may fluctuate and rise, but not much, on the second half July.