The cost continues to fall and the steel price rebound is limited

September 28, 2019

The cost continues to fall and the steel price rebound is limited

Last week, the domestic steel production cost continued to decline. According to the cost model, as of May 23, the cost of carbon billet is 3028 yuan/ton, the cost of tertiary thread is 3457 yuan/ton, the cost of ordinary carbon board is 3443 yuan/ton, and the cost of high line is 3382 yuan/year. Tons, the cost of hot rolling 3.0 is RMB 3,494/ton, and the cost of cold rolling 1.0 is RMB 3,858/ton. The production cost of the above steel products decreased by approximately RMB 17-18/ton from the previous Friday, with a decrease of 0.44%-0.60%.

From the factors that affect the cost of steel production:

1. Raw material market: Last week, raw materials were traded poorly, steel mills used them with mining, and prices continued to decline. Prices fell partially, among which, domestic mines fell, import mines continued to decline, and coal coke was weakly stabilized. As of May 23, compared with the previous Friday, the average price of domestic iron concentrate fell by 22 yuan/ton; the average price of imported ore fell by 21 yuan/ton; the average price of metallurgical coke was stable.

2. Shipping market: Last week, the shipping market went down. As of May 23, compared with the previous Friday, the freight rates of Brazil-China Capesize vessels fell by US$0.554/ton, and the freight rates from Western Australia to China's Capesize decreased by US$0.178/ton; the BCI index dropped 172 points, and the BPI index fell. At 40 points, the BSI fell 33 points and the BDI fell 63 points. It is expected that the shipping market will continue to be weak in the short term.

Last week, the cost continued to fall, and the financial pressure at the end of the month was relatively high. Businesses actively took the lead, causing the overall price of ** and spot prices to fall. However, there are some positive aspects in the macro economy. For example, the central bank’s monetary policy has turned to a loose balance, and the country’s “micro-stimulus” policy has continued to increase. The initial value of HSBC China's manufacturing PMI rose in May. Local cities outside Guangzhou, Shenzhen, and Shenzhen can adjust their property purchases on their own. Policies, etc. In addition, the social inventory of steel products continues to decline, and there is a continuing shortage of specifications in some regions, and the market has begun to stabilize. Entering this Monday, snails rose sharply, which was a concentrated burst of defensive sentiment in the market in recent days. However, the basis for this period's rally is not stable, and the pressure on the property market has not been significantly relieved. Market funds are still not optimistic, and the cost is still weakening. It is expected that the upside of steel prices this week may be limited.

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