In the context of global inflation, coupled with the promotion of strong domestic demand, steel prices have risen again at historical highs, and the rise is fierce and helpless.
The sharp rise in steel prices has doubled the pressure on downstream enterprises, the original weak profit margins have been further backlogged, and the downstream processing and manufacturing industry is waiting for the steel market to cool down in the pain of the industry.
Steel prices have soared and set new records
Steel prices, which have maintained an upward trend in recent years, have risen sharply again today, and hitting a record high is no longer news.
On the morning of May 10, the futures market steel prices continued to explore at the highest point in history; as of the afternoon close, the domestic rebar futures 2110 contract soared 340 yuan / ton, easily crossed the 6000 yuan / ton mark, rose to a high of 6012 yuan / ton, an increase of 5.99%; hot-rolled coil after the record high on May 8 to set a new high, soared 358 yuan / ton, rose to a high of 6335 yuan / ton, an increase of 5.99%.
In the spot market, domestic steel prices continue to soar. Lange Steel cloud business platform monitoring data show that the price of rebar in the Beijing market has risen to 6300 yuan / ton, an increase of 500 yuan / ton; the Hangzhou market and the Xi'an market have risen by more than 300 yuan / ton, and the mainstream resource quotation has reached 6000 yuan / ton; the average price of 25mm tertiary rebar in the top ten key cities in the country has reached 6066 yuan / ton, up 374 yuan / ton from the previous trading day.
After May Day this year, domestic steel spot and futures prices have ushered in several consecutive days of violent rise; including hot-rolled coil, medium and thick plate, galvanized pipe, steel billet and other steel prices have reached hundreds of yuan per ton, catching the market by surprise, some traders only accept cash shipments due to a significant increase in the proportion of funds, and even multiple price suspensions and steel mill plans to stop reporting.
Since the first quarter, in the context of global inflation, commodities have ushered in a frenzy of price increases, as an important raw material for steel mills, iron ore and coke prices have also risen at the same time; coupled with strong demand for steel at home and abroad, domestic carbon neutrality, carbon peak policy outlet, as well as Tangshan and other places due to environmental protection production restrictions have brought tight supply expectations, the steel industry's new capacity replacement policy and the adjustment of import and export policies have stimulated the market, and the momentum for steel prices to rise is very sufficient.
Lai Fuyang, an analyst at Open Source Securities, pointed out that the apparent demand for both rebar and hot-rolled coil last week has declined to varying degrees, but this is mainly caused by holiday factors, the real trading volume of the market is still at a high level, the current peak season demand is generally strong, but the recent sharp rise in prices is more driven by the emotional level.
In the case of optimistic expectations, traders took the initiative to raise prices sharply during the holiday, and the post-holiday spot accumulation increase boosted the futures price, while the strength of the futures further stimulated the spot price higher.
The profitability of downstream enterprises in the industrial chain is worrying
The steel industry is one of the important raw material industries in the country, real estate, automobiles, home appliances, machinery, shipbuilding and elevators are important downstream industries in the steel industry, and are also severely affected by steel price changes.
Since the first quarter of this year, steel companies have made more than a thousand yuan per ton of steel, and when iron ore prices have soared, domestic steel companies can still maintain a high level of profitability and make a lot of money, but downstream companies are not so lucky.
Industry insiders pointed out that large enterprises have brand advantages can also transfer the pressure brought about by rising costs through product price increases, and it is difficult for small enterprises to transmit the pressure of rising costs due to weak bargaining power; and the different order models adopted by different industries also make their treatment of steel price increases different.
My steel network survey of some enterprise samples show that for the machinery industry, commodity prices continue to squeeze corporate profits, large brand manufacturers due to the strong brand effect, product premium space is large, limited impact; small and medium-sized enterprises are difficult to bear the continuous soaring price of raw materials.
For the home appliance industry, since the first quarter, the price of basic raw materials such as copper and steel, as well as the shortage of chip supply, have brought a wave of price increases to the home appliance industry, with an increase of more than 10%; now the price of raw materials continues to rise, and it is difficult for home appliance companies to make profits or even lose money in export orders in the second half of the year, and the willingness of enterprises to accept orders is low.
My steel network analysis pointed out that large home appliances production enterprises due to the large amount of steel, in the context of the sharp rise in steel prices, production costs are high, its profitability is also worrying, small home appliances production enterprises use less steel, can flexibly adjust the product structure, so the profit situation is better; the elevator industry also shows the characteristics of the head of large enterprises and small and medium-sized electrical appliances Profit pressure polarization.
For the shipbuilding industry, its new ship order cycle is generally 1-2 years, the previous year and last year to undertake the price is in accordance with the price of the ship board at that time to calculate the cost of the agreed price, the current price of the ship board than the order increased by about 50%, the previous order appeared a large area of loss, raw material procurement willingness cautious.
An insider of a state-owned construction enterprise told the 21st Century Business Herald reporter that the company purchases steel in accordance with the benchmark price regularly adjusted by the National Development and Reform Commission, and after the market price changes by more than a certain proportion, the company will directly apply for price compensation from the owner, so the cost of raw materials can be transmitted smoothly.
"However, the rise in the price of basic raw materials is bound to bring about a rise in construction costs, which will affect the trend of future house prices." The insider said.
Where does the downstream of the industry go?
Ge Xin, deputy director of the Lange Steel Network Research Center, told the 21st Century Business Herald reporter that the current raw material price has been significantly higher than that of the downstream manufacturing industry when accepting orders, in order to avoid more substantial losses, some manufacturing manufacturers can only choose to refund the order, break the contract and pay liquidated damages.
Ge Xin said that it is difficult for terminal consumer goods to raise prices significantly, and it is impossible to transmit cost pressure through price adjustment, and the profit space of some manufacturing companies has been further backlogged; recently, the relevant departments have issued a number of policies to reduce the pressure brought by the cost increase in the manufacturing industry, but the current round of commodity price increase momentum is very strong, and it is difficult to be effectively controlled in the short term.
For home appliances, machinery, elevators and the automotive industry, the sharp rise in the price of steel and other production materials, resulting in high procurement costs, most enterprises have not affected the normal production of materials under the premise of as little procurement of steel as possible, looking forward to steel prices fall after the stock, wait and see the willingness to wait; the automotive industry is affected by the tight supply of chips and production cuts, May production capacity is expected to continue to be limited.
In addition, with the continuous jump in steel prices, the pressure on downstream steel processing enterprises has gradually increased.
The person in charge of Tangshan Fuhaixin Co., Ltd. said that due to the impact of environmental protection production restrictions and the tight supply of local steel billets in Tangshan, the company is in a state of suspension of production; but due to the large increase in billet prices, the acceptance of the price downstream is declining, the company's processing end basically has no profits, and the impact of the suspension of production is not too large.
Ge Xin pointed out that because some manufacturing enterprises have reduced the amount of steel stockpiling and waited for steel prices to return to rationality, so the social plate inventory has begun to slowly rise; with the adjustment of the steel import and export tax rebate policy, it is expected that the steel market will return to a rational state in the second half of the year, but it will remain strong in the short term.
Lange Steel cloud business platform monitoring data show that as of May 7, the steel social inventory was 14.186 million tons, an increase of 14,000 tons over last week, ending eight consecutive declines, down 14.3% month-on-month and 12.8% year-on-year.
A number of industry insiders pointed out to the 21st Century Economic Herald that the cost of raw materials is difficult to meet a sharp decline in the short term, and when bearing the pain brought about by rising costs, the domestic manufacturing industry has also been forced to carry out industrial upgrading, eliminate backward production lines, and produce high value-added products to cope with the market crisis.
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Author | Peng Qiang
Edit | Li Qingyu
Editor-in-charge | Kim Shan
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