Steel demand still exists steel prices rise difficult

As July approaches, all parts of the country are working hard on infrastructure projects to complete the important task at the beginning of the 14th Five-Year Plan.As an indispensable part of infrastructure, steel prices have risen sharply this year, and hit a record high, causing widespread concern in the market.

Under the guidance of relevant policies, what is the future price trend of iron ore and steel?What is the impact on the relevant listed companies?To this end, Securities Daily reporter interviewed five chief executives (including chief economist, chief analyst) to analyze the development of the steel industry.

Iron ore prices jumped and fell

The State Council, China's cabinet, has named commodities four times since mid-May in response to rising prices of commodities and raw materials.

China merchants fund chief economist navalarchitects said in an interview with "securities journal" reporter, rising commodity prices, will increase the cost of manufacturing a middle pressure, rising cost of production and operation of manufacturing enterprises, further to the downstream consumption field, may cause the problem of inflation, is not conducive to macroeconomic steady growth.The relevant measures taken by the state in response to rising commodity prices are conducive to relieving the cost pressure of the mid-stream manufacturing industry and promoting the sound development of the macro economy.

Statistics show that on March 31 this year, the main iron ore futures contract hit a stage low of 919.5 yuan/ton in the intraday, all the way up, hit a historical high of 1358 yuan/ton in the intraday on May 12, a cumulative increase of 48.33% during the period.As of June 28, the main iron ore futures contract was at 1,196 yuan/ton, down 13.55 percent from the high of 1,358 yuan/ton on May 12.

On the spot side, iron ore hit a stage low of $156.35 a tonne on March 22 and climbed all the way to $233.1 a tonne on May 12.Spot iron ore prices stood at $218.7 a tonne as of June 28.

What are the reasons for the early rise in iron ore prices?Chen Mengjie, chief strategist at Yuekai Securities, said: "First, the overseas market, stimulated by the large-scale monetary easing policy, has greatly boosted the expectation of economic recovery and inflation.Second, in the context of the epidemic, the supply of commodity production areas contracted, combined with the domestic "carbon neutral" target of production limits, resulting in a mismatch between supply and demand and a gap.

For the downward trend of iron ore prices, Yang Delong, chief economist of Qianhai Open Source Fund, believes that: on the one hand, it is related to a series of measures taken by relevant national ministries and commissions on the rise of commodity prices;On the other hand, it is due to the monetary easing policies of central banks around the world, especially the "water easing" of the Federal Reserve, which has led to the surge of commodity prices.

In the regular session of the United States 4 times after the mention of bulk commodities, coke, coking coal, thermal coal, iron ore, rebar, hot rolled coil and other prices have appeared to the extent of the decline.

Xu Weihong, chief economist of Yongxing Securities, told Securities Daily that domestic steel prices are basically in step with global commodity prices.The rise in global commodity prices, including domestic steel, has squeezed export profits for domestic manufacturers.As expectations of US monetary policy tightening rise, there has been a significant correction of the irrational rise in commodity prices since June, which is positive for the steady development of China's economy.For the Fed, the feed through to the consumer price index is clear.

Future steel price rise space is limited

Zhu Hong, a senior statistician at the industry department of the National Bureau of Statistics, said that due to factors such as rising commodity prices, the new profits of industrial enterprises are mainly concentrated in the upstream mining and raw material manufacturing industries, while the cost pressure of the downstream industries is increasing.In the next stage, we will focus on guiding the prices of bulk commodities to return to the fundamentals of supply and demand and promote the sustained and stable recovery of the industrial economy.

In this context, the production costs and countermeasures of the relevant listed companies were questioned intensively by investors on the interactive platform of the Shanghai and Shenzhen Stock Exchanges.To this, many listed enterprises gave a positive response.Tongda Power responded that the early steel prices continued to rise, the company on the one hand through price linkage measures, and downstream customers adjust the price of products and other ways, transfer part of the risk;On the other hand, through technological transformation, improve capacity utilization rate, and constantly reduce the company's manufacturing costs, in order to alleviate the pressure caused by rising raw material prices.

Looking forward to the future trend of steel prices, Bao Xin Finance chief economist Zheng Lei said in an interview with "Securities Daily" reporters, infrastructure as a key area of steel, there is still a large demand in the third quarter, the "steel demand" is still driving, steel prices are expected to be stable in the second half of the rise.

Chen Mengjie estimated that in the "carbon neutral" target, steel production limits to form a certain pressure on supply, but the overall output is easy to go up and down.Steel price growth is expected to slow in the second half, but remains at historically high levels.

Li Zhan said that with the implementation of the "price stability" regulation policy, steel prices or gradually tend to be stable, the future growth space is more limited.With the advance of the Federal Reserve interest rate, as well as the global economy gradually return to normal, steel prices are expected to gradually enter the downward channel.