Recently, steel prices fell sharply, steel profits sharply reduced, in the high cost, low profit, finished material inventory overstocked environment gradually reduce production, reduce the demand for raw fuel, while transferring losses to upstream raw materials. For the largest proportion of iron ore, recently showed a wide shock down trend, coke first round of price reduction is still continuing to decline. In the terminal demand downturn is difficult to change, steel mills to expand the scope of production reduction, steel mills continue to pressure the price, raw fuel demand support weakened, whether to follow down?
Recently, steel downstream demand downturn, and a series of heavy rain led to the start of the blocked, steel prices significantly down, steel profits were severely squeezed, production reduction gradually increased, coupled with the increase in the supply of imported iron ore is expected to be strong, leading to a significant drop in mine prices.
At present, many places in south China continue to rain. From June 19 to 21, there will be heavy rain along the middle and lower reaches of the Yangtze River, jiangnan, South China and other places, and there will be heavy rain locally. In June, many regions of The country entered the plum rain season, and this year’s rainy season is earlier than in previous years. Many places in South and central China were affected by rain for a longer time, and the impact of heavy rain in many places forced construction projects to stop, and the overall market demand declined. According to meteorological data, with the continuous abnormal precipitation, demand is expected to continue to be weak for some time to come.
According to the survey, tangshan and surrounding steel mills due to profit upside down from June 15 to date, a total of 7 blast furnace overhaul, overhaul volume of 9210m3, daily impact of hot iron capacity 22,800 tons. Although some steel companies do not have blast furnace maintenance, but in the implementation of 10-20% production reduction operation. Up to now, because of the substantial reduction in steel mills’ profits, from the end of June to July, a total of 8 steel enterprises in tangshan and its surrounding 10 blast furnaces plan to overhaul and reduce production, maintenance volume of a total of 13460m3, the average daily impact of molten iron output of about 33,700 tons (including 4 blast furnaces for capacity replacement and elimination capacity).
In addition, June is the rush stage of the Australian mine fiscal year, and the shipping volume may show a significant recovery. Last week, the shipping volume of Australia and Brazil recovered a large number of ore, and the short-term continuous increase of overseas ore shipping volume has caused great pressure on the iron ore price on the supply side.
Coke:
Under the environment of global high inflation pressure and sluggish domestic demand, steel mills are expected to reduce production, steel prices have fallen sharply, and coke prices are high and unstable. Hebei large steel coke procurement on the 20th to implement the reduction of 300 yuan/ton, east China and other places of steel coke procurement price followed by a reduction of 300 yuan/ton; The first round of price cuts was implemented. Coking coal prices still maintain a relatively strong operation situation, coke production cost pressure increased, in coke prices fell, coke enterprises into a loss. Many coke enterprises take the initiative to reduce production in order to protect themselves, and individual enterprises limit production by more than 50%. Steel mills in the steel price continues to weak, production continues to increase under the influence, again put forward the price reduction, a reduction of 200 yuan/ton.
The market Committee of The Coke Association held a market analysis meeting in June, and the main coking enterprises in Shanxi, Hebei, Inner Mongolia, Shandong, Jiangsu, Shaanxi, Jiangxi, Guizhou and other places attended the meeting. The participating enterprises agreed to adhere to the principle of “no production at a loss” and “no sales at a profit”, to comprehensively limit production and suspend coal procurement. Inclined delivery, will be limited resources to provide good credit customers; Adhere to the advance payment policy unwavering. At present, the economy is recovering from the epidemic, and various policies are being implemented at a faster pace. In the current steel market downturn, coke is still in short supply, the later economic recovery of reasonable growth, coke supply and demand tension will further intensify.
Affected by price cuts and production cuts in downstream industries, coking coal sales are blocked, coal companies basically have no new orders, online auction prices fall sharply, and the number of auctions increases; Downstream production pressure gradually transferred to the upstream, coking coal spot price reduction is expected to enhance. Coking plant losses range from 200 to 300 yuan/ton, with the second round of price reduction of 200 yuan/ton landing, coking enterprise losses further increase; Feedback to coking coal will have 500 yuan/ton of decline to make up for the loss of coke enterprises. Around the coke enterprises have reduced production, later coke supply and demand double reduction, steel price is expected to remain unchanged, coke later price space is limited.
To sum up, under the influence of the global economic downturn, the domestic rainy season drought and other weather, the overall demand has not been significantly released, the inventory of finished steel materials backlog, steel prices continue to be weak bottom, steel losses and production reduction and pressure to upstream raw fuel. Iron ore supply is expected to increase, demand continues to slump, the price will still maintain a weak consolidation pattern. Coke in its own supply and demand double reduction, enterprise losses under the influence of the possibility of continuing to fall sharply, still continue to bottom market. Ultimately is the demand, still need to see the strength of steel production and steel price changes.
