Steel industry won't get better with lower iron ore prices

After a period of rising prices, the steel industry has recently entered a turbulent trend. The performance of steel will inevitably add cold sweat to the industry. When the steel industry can reinvigorate, many people in the industry look forward to the arrival of gold, nine silver and ten. Although Vale, one of the three major international miners, plans to reduce the price of iron ore by 10% in October, compared with the increase of nearly 30% in the third quarter, it is insignificant.

The steel industry has experienced a five-month downward trend since April, which is 37% higher than the same period of last year.

Since April, China's steel industry has experienced a double blow of policy and economy. The ultimate goal of a series of policies issued by the government is conducive to the development of the steel industry. The domestic crude steel production surges, domestic inventory pressure increases, and pressure from producers and traders is beyond doubt. Many parts of the steel industry are in a state of strong saturation. This is one of the important factors for the low price.

In terms of export volume, from January to July, a total of 28,130,000 tons were exported, a year-on-year increase of 152.1%. Order indicators began to improve in August, and steel exports are in general. The export order index rebounded from 40.7% in July to 45.1% in August; the new orders index rose sharply from 36.7% in July to 55.5% in August. International demand is weak, and it is difficult for the future steel exports to exceed expectations.

With the resumption of production of small steel mills, it will bring about a certain increase in supply. In August, July and August, the majority of the poor steel enterprises were overhauled and the current productivity increased. The workshop of Changdu Iron & Steel Equipment Maintenance Department passed the continuous operation for 36 hours and completed the overhaul task for H-beam steel production equipment. Laiwu Steel plans to start repairing the HRC production line in mid-September for a period of 11 days, affecting production of 4-5 million tons.

The rise in the price of steel raw materials is an important factor in the rise in steel prices. Although Vale, one of the three major international miners, plans to reduce the price of iron ore by 10% in October, compared with the increase of nearly 30% in the third quarter, it is insignificant. With the increase of raw materials, the cost of steel enterprises has increased, and steel mills have increased the ex-factory prices of steel products in order to obtain small profits. The price of iron ore rose in August and the price was as high as 1,200 yuan. The billet price also climbed. The increase in cost led to the rise in steel prices.

Although the downstream real estate, automobiles, and shipbuilding industries have all improved, they are still in a relatively weak period and have not recovered from their roots.

According to Bao Baoxia, an analyst at Steel Business, steel will continue to be in a state of high cost, high inventory, and low profit in September. There will be no major improvement in market demand and will continue to be dominated by digested stocks. The steel industry will not improve due to the reduction in iron ore prices.