Because the capacity will continue next year, the heating season will have a certain degree of inhibition on the total supply of steel. Many experts and analysts are optimistic about the steel price next year. However, in 2018, steel market is not optimistic, the price of steel has a decline in space, temporarily not to say that the price of steel will exceed 5000 yuan per ton, on the contrary, next year the average level will be about 5% lower than the current price. This is reasonable and necessary, but due to the uncertainties of many factors, the roller coaster market is likely to happen next year.
During the heating season, the steel production demand declined, but the supply decline was more obvious. If the price of steel is still high, to the downstream manufacturing industry and the development of the national economy, it is possible for the government to regulate the price of steel by overseeing the price of large enterprises as the coal industry is.
The new supply will pick up quickly after the end of the deadline
Up to now, the capacity to achieve super expected results, which is a key factor in the steel market is strong. A few days ago, He Lifeng, director of the national development and Reform Commission, said at the press conference of the nineteen news centres that surplus steel production capacity had exceeded 1.1 billion tons.
In addition, in 2016 and 2017, the iron and steel production capacity was overcompleted in accordance with the task target of three to five years to solve 1.4 billion tons of steel production capacity, and the actual capacity in 2018 may be less than 25 million tons in 2018. That is to say, next year, the pressure of production capacity may be very small, and the profits of steel mills are relatively high. Next year, steel production capacity will increase rapidly. However, from the policy point of view, the supply side reform will not be relaxed next year, and the supply of steel will hardly increase significantly.
It is reported that the Ministry of industry and information industry and the Ministry of industry and information industry and the development and Reform Commission of the China Iron and Steel Industry Association have conducted three party consultation with the China Iron and Steel Industry Association. In 2018, the Ministry of industry and credit and the development and Reform Commission will effectively promote the work of iron and steel production, establish and improve the long-term mechanism of market-oriented, rule of law and ban "ground bar steel" to prevent the death of "ground bar steel". Ash reburning; urged all parts of the capacity replacement work, new steel production is strictly prohibited.
But the production capacity of the BF and EAF is also high, and the capacity of legitimate transfer is also very large. This year, the new and re produced iron making capacity is 40 million tons, electric furnace capacity is 15 million tons, next year, 20 million tons of blast furnace ironmaking capacity and 20 million tons of electric furnace steelmaking capacity will be added. Many of these are coming into operation in the second half of this year, and new supply will not be small next year. Seasonal demand will pick up after the end of next year's production in March, but supply will probably increase rapidly, and steel market pressure will increase rapidly.
The weakening of demand is a large probability event
Next year, monetary policy may shift from tighter to tighter and slower economic growth, resulting in a steady decline in steel demand.
We expect the growth rate of fixed assets investment in 2018 to be around 7.2%, which is roughly the same as that of 2017. The growth rate of infrastructure investment will decrease slightly, and investment in manufacturing industry will be stabilized. In spite of the upstream capacity and de leveraging pressure, corporate profits may be mainly used to repay debt rather than equipment investment, but downstream investment demand may lead to a steady fall in overall manufacturing investment.
In addition, influenced by the real estate policy, the growth rate of real estate sales is expected to fall to about 1.5% next year. The growth rate of real estate investment is at the bottom in the middle of the year, and the bottom is around 4.7%. Affected by the slow down of real estate investment and infrastructure investment, the actual GDP growth rate is expected to slow to 6.6% next year.
It is estimated that the growth rate of other steel industries such as machinery, automobiles and household appliances will also slow down next year, and the pulling effect on steel will be weakened. Machinery and infrastructure, real estate related degree, with the latter growth decline and next year mechanical export will be good, mechanical growth will be flat or a slight decline in the last year. Next year, the cancellation of auto purchase tax will slow down the growth of auto sales.
The major economies of the world have recovered well since this year, and all countries have realized that the policy of using over quantitative easing to stimulate the economy is too risky and can not be sustained again, intending to "brake".
The monetary tightening policy is beneficial to the commodity market, while the financial policy stimulates the economy to stimulate the demand for commodities, but the money supply is negatively related to the commodities, and the tight monetary policy, especially the Fed's tight currency, will have a certain inhibitory effect on the global commodity market.
Exports will be further reduced
Data from the General Administration of Customs showed that China exported 4 million 980 thousand tons of steel in October 2017, down 35.3% from the same year, and 64 million 490 thousand tons of China's exports of steel in 1-10 months, down 30.4% compared with the same period last year.
The sharp decline in steel exports this year is mainly due to the narrowing of the domestic and foreign prices, and the upside down of the prices of many varieties, which has greatly reduced the export power of enterprises. Enterprises now sell well and make good profits. They do not care about domestic or foreign businesses. It is expected that the domestic steel market will be better next year, and the price difference between the inside and outside will be small. The export power of the enterprises will not be strong enough, and the export will be difficult to pick up.
In addition, the price of iron ore has a downside space, coal price monitoring will be the focus of the work of the NDRC next year, the price high operation is difficult to continue, the downlink probability is larger, so the raw material cost support for the cost of steel price will be further weakened.
As the capacity of large-scale investment has been gradually released in recent years, the four major mines, such as Australia and Brazil, will add nearly 50 million tons of capacity next year, which are expected to increase 40 million tons of iron ore, while foreign demand growth is limited, and large increments will flow to China. Domestic scrap supply is increasing and iron ore supply exceeding demand will intensify. Next year, the import price of iron ore will further decline, 62% grade Australia.
