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2018
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The trend of testing steel price should pay attention to cost and supply and demand pattern
At the end of recent years, domestic steel mills have held the annual ordering meeting, in which a series of policies for customers to order next year were issued either publicly or in secret.
The author found that the iron and steel industry "patent" intensified, and even loss of backdrop, compared with the previous order policy, at the end of this year, from steel mills to grab next year's market share, stable and for agents and end straight for the customer's order quantity, developed the order policy is "preferential outstanding", "with".
However, this series of "preferential" policies, for the "loss of nearly a year" steel industry agents, still seem to lack appeal. According to the feedback of steel traders, at present, steel mill agents hold a wait-and-see attitude towards whether to continue to act as steel mill agent next year and whether to maintain the order quantity with steel mills. Some of them even decide to withdraw from the cooperation mode of steel mill agents.
Steel industry insiders speak out, "steel mills dominate the position" of unequal manufacturer relations, as well as the traditional model of steel mill agency, is suffering great challenges.
Order policy of steel plant for next year
Recently, benzhou steel, wuhan iron & steel, sha steel and other steel plants have held a customer order meeting for 2012. It is understood that each steel plant orders every year, the purpose is to focus on inviting new and old customers to communicate, and customers to determine the next year's order contract.
According to the feedback of steel traders who participated in the order meeting of the above steel mills, the profit space given to steel traders by the major steel mills this year and the "preferential benefit" given to the steel traders, compared with the previous order policy of "only many more", and the "preferential" way is diversified. In order to grab market share next year, there is a fierce competition among big steel mills.
When studying the law of change of steel price, we have to pay attention to two aspects, one is cost, the other is supply and demand pattern. As mentioned in economic theory, value determines price, and the relationship between supply and demand affects price fluctuation around value. In the analysis of steel price, cost determines the value center of steel price, and the dynamic balance of supply and demand pattern forms the fluctuation of steel price.
Cost decides the value center of steel price
Cost and steel price interact each other and complement each other. When the price of steel falls, the price of raw materials will fall, and the center of gravity of cost will move down, which will impact the price of steel again and may even break the cost.
According to the statistical analysis of the data, in the process of steel price decline, the decline of raw material price is slightly lagging, generally the lag period is 10-15 days, while the lag period of cost decline is longer, about a month or so, which is largely related to the raw material inventory cycle of steel mills. In the process of steel price stabilization and recovery, raw material price stabilizes earlier than steel price, and there is no big time difference. At this time, the supporting effect of cost on steel price is obvious.
Steel price conduction mechanism: the dynamic balance process of supply and demand pattern
The change of supply and demand and cost is the main factor to determine the price of steel.
As in September and October this year, steel prices fell sharply while costs remained high. Profits of steel mills were compressed rapidly and even suffered losses, which forced steel mills to cut output. The effect of production cut was reflected in the spot market, resulting in a tight supply and a decline in inventories. Consider demand. If demand is weak and falls more than supply, the pattern of supply and demand deteriorates, steel prices will still fall. If demand picks up or stabilizes and the supply and demand pattern improves, short-term steel prices will rebound or rise.
When steel prices rebound or rise, the profit margin of the steel mill expanded, and under the stimulus of profits, the steel mill increased production, resulting in increased market supply and increased inventory. If the market demand improves and the increase of demand exceeds the increase of supply, the supply and demand pattern will improve and the steel price will gradually recover. If demand remains stable or weak and the supply and demand pattern deteriorates, steel prices will fall.
Therefore, under the combined impact of supply and demand, steel price fluctuates with cost as the center.
Inventory is the comprehensive reflection of supply and demand pattern
How to observe and consider the change of supply and demand pattern? Inventory is a comprehensive reflection of the supply and demand pattern. We often hear about the market 'destocking and replenishing inventory'. The market has certain mistaken understanding to inventory, think commonly, go inventory stage, steel price can fall, fill inventory stage, steel price can rise, but actually otherwise. Whether to go inventory or fill inventory should be considered active or passive.
Passive inventory reduction: when both production and inventory decrease, demand begins to show activity, but the rate of steel plant construction is still in the initial recovery stage, at which time steel prices will be expected to recover stably. Active inventory increase: when the market demand is strong and the scale and operation rate of the steel plant keeps expanding, the inventory shows a state of active increase, and steel price is expected to rise. Passive inventory increase: when the real demand of the market is difficult to keep up with the pace of construction and expansion of production, inventory appears passivity increase, steel prices appear stagflation, even the risk of falling. Active inventory reduction: due to weakening demand, traders are forced to sell goods to hold down inventory, steel mills are forced to reduce construction and reduce sales, which leads to lower steel prices and reduced inventory.
Run trend of steel price under inventory cycle
To sum up, to explore the operating trend of steel price, we should pay attention to the change of cost and supply and demand pattern, that is, the gross profit of tonnage steel, the change of inventory and the stage. For now, the domestic steel market is still in the active inventory reduction stage, since the latter demand will remain weak, so this stage will remain at least until march next year.
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