U.S. media said that in recent weeks, the news that the United States imposed import tariffs will focus globally on the steel issue, and steel prices will be hit. However, what really annoys investors is China: This year so far, the demand for the world’s largest steel consumer country is lower than expected.
According to a report from the US website on April 1, China’s steel demand growth is decelerating. Moreover, despite Beijing’s mandatory winter production cuts, steel stocks remain high. Demand growth is slow, and stocks are huge. Investors and analysts are concerned about this.
According to the statistics of Macquarie Bank, the rebar futures price has fallen by 12.6% so far this year, and the closing price on March 23 was 3542 yuan per ton.
According to the Macquarie statistics, in January and February 2018, China’s steel production increased by 4.1% year-on-year, which is significantly higher than the 2.5% increase in other parts of the world. Macquarie Bank pointed out that in the same period in 2017, China’s steel production fell by 0.5%.
According to the report, at the end of last year, analysts began to bullish the steel market and predicted that the winter production cuts taken by China to reduce pollution in densely populated areas will lead to a reduction in steel supply at the beginning of this year.
The report stated that Seth Rosenfeld, head of Jefferies Investment Bank’s equity research, metals and mining department, said: “We originally thought that inventory would be reduced because of a reduction in production… but in fact, the inventory at the end of February and early March was increasing. .”
Serrafino Capofeli, an analyst at Macquarie Bank, believes that China has not seen the growth in demand that was usually seen at this time in previous years.
The report said that analysts believe there are several reasons for this change.
“The credit situation is reasonable, construction activity is lower than expected, and exports are not as good as last year. What’s important is that steel profits are strong and output is high,” said Colin Hamilton, director of commodity research at Bank of Montreal Capital Markets, Canada.
Of course, some analysts believe that China’s demand has not decreased.
First of all, since the beginning of this year, China’s economic statistics have actually rebounded, which is inconsistent with the expected decline in economic growth.
According to the statistics of the Chinese steel industry website, as of the week of March 23, the inventory of Chinese steel mills fell by 4.3%. Some analysts even believe that steel prices may rebound.
Capo Feri said: “I think that inventory will be reduced … I visited China a few weeks ago, and the mood there seems to be very good.”
However, some analysts predict that steel prices will fall further.
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Post time: Apr-04-2018