China steel price Increasing

Since the beginning of this year, the rapid rise of steel prices has aroused social concern. What are the reasons for the rise in steel prices? What are the derivative effects of the rise in steel prices? What will be the trend of steel price in the future?

Steel price “roller coaster” led to a surge in the cost of downstream industries.

According to the monitoring of China Iron and Steel Industry Association, from the beginning of this year to the middle of May, the domestic steel price went out of a wave of rising market. As of May 14 this year, the domestic steel composite price index (CSPI) was 174.81 points, up 40.4% from the end of last year; The long timber price index was 179.56 points, up 42.2% from the end of last year; The price index of sheet metal was 175.07 points, up 38.7% from the end of last year, reaching a historical high of more than 10 years.

The reason for this round of steel price rise is mainly the spillover effect brought by the expansionary quantitative easing policy of developed economies in Europe and the United States, which gave birth to the expectation and trend of raw material price rise in the world. At the same time, China’s economic development is resilient, exports are strong, manufacturing investment is supported, and consumption continues to recover marginally, which also drives the growth of steel demand and drives up steel prices.


“The rise of iron ore is larger than that of steel price, which is an important factor in the rise of steel price. The financial attribute of iron ore futures makes the market speculative, which promotes the continuous rise of steel price.”measures such as double control of production capacity and output, environmental protection and production restriction, and steel de production capacity, etc, It also increases the market’s expectation of the reduction of steel supply and the rise of steel price.
In the face of steel prices continue to hit new highs, the cost pressure of downstream steel industry is obvious, not only facing the difficulty of increasing costs, but also the more serious problem is the shortage of funds and increased occupation. Some downstream enterprises have weak ability to transfer costs. The rise of steel prices has caused a substantial reduction in profits and even losses, and the willingness to purchase steel will gradually decrease.
It is worth noting that the adverse effects of the recent rising commodity prices have attracted the attention of the relevant state departments.https://otaialloysteel.com/contact/

On May 12, the executive meeting of the State Council called for tracking and analyzing the situation and market changes at home and abroad, doing a good job in market regulation, and coping with the rapid rise of commodity prices and its associated effects. On May 19, the executive meeting of the State Council proposed that we should do a good job in ensuring the supply and stabilizing the price of bulk commodities, curb the unreasonable price rise, and strive to prevent the transmission to consumer prices. On May 26, the executive meeting of the State Council demanded that we should do a good job in ensuring the supply and stabilizing the price of bulk commodities, and crack down on hoarding and driving up prices. At the same time, on May 23, the national development and Reform Commission, the Ministry of industry and information technology, the state owned assets supervision and Administration Commission, the General Administration of market supervision and the China Securities Regulatory Commission jointly interviewed key enterprises with strong market influence in iron ore, steel, copper, aluminum and other industries. They were required to take the lead in maintaining the market price order of bulk commodities, not to collude with each other to manipulate market prices, fabricate and disseminate price increase information, and not to hoard Bid up prices.
Affected by this, since May 20, all kinds of steel products in the national steel market have decreased by more than 10%. On May 21, the domestic steel composite price index was 154.34 points, which has fallen back to the level at the beginning of May.
Steel and other commodity prices fell, mainly due to the government’s strict supervision measures. This shows that the rapid rise of commodity prices in the early stage is due to the dislocation of supply and demand, as well as the market’s follow-up speculation and even bid up prices.
Recently, the prices of raw materials, including steel, have risen sharply, and some downstream industries are under great pressure. The sharp rise in prices is likely to be accompanied by a sharp decline. The market trend in may fully illustrates this phenomenon. At present, the price of steel has fallen back to the level before the May Day holiday, but the price of raw materials has not fallen at the same time. In fact, it is unfavorable for iron and steel enterprises.
Therefore, iron and steel enterprises should take the lead in maintaining the price order of steel market, and do not engage in low price dumping and vicious competition; Do not collude with each other to manipulate the market price, fabricate and spread price information; Do not hoard and drive up prices. At the same time, it is necessary to adjust the export strategy, put the starting point and foothold on meeting the domestic demand, give play to the role of supplement and adjustment of import and export, and adapt to the new development pattern of iron and steel import and export.
At present, from the domestic market situation, there is no overall and trend change in the supply and demand of iron and steel products, and the steel price does not have the basis for continuous and substantial rise. From the supply side, the crude steel output reduction and environmental protection supervision are about to start, and it is difficult for the crude steel output to increase significantly in the later stage; From the demand side, due to the rapid rise of steel prices since April, shipbuilding, home appliances and other downstream steel industries can not bear the pressure brought by the high consolidation of steel prices, and it is difficult for steel prices to rise significantly in the later period.
Industry insiders believe that from an international perspective, the world economic recovery is still unstable and unbalanced, there is no overall and trend change in the supply and demand of bulk commodities, and their prices do not have the basis for long-term rise.
In the future, with the slowing down of macro-economy, the market demand side will return to a reasonable level. With the gradual narrowing of domestic and international price gap, the export tax rebate adjustment policy will gradually play a role, the domestic supply will increase, and the steel price will gradually return to a reasonable range.
(Source: People.cn)