Steel traders' profits and sales are hard to grow proportionally

For steel traders, the “Golden September and Silver 10” in 2013 is destined to be an unusually diversified game. There are too many complicated variables and possibilities in terms of policy, international situation, finance, climate and so on. Let me briefly describe the current environment in turn.

Policy aspect

The central government has already made it clear that the bailout policy will not repeat itself. The Chinese economy needs reform rather than blood transfusion. The local government's debt ratio is still subject to real estate enterprises. It is clear that a considerable number of municipal infrastructure projects will generally tighten funds. Even if demand is heavy, terminal pricing may not be optimistic, while steel mills headed by Baosteel generally raise the ex-factory price. The profit and sales of steel traders who are among them are likely to grow in direct proportion.

International situation

There are two main points. First, the United States gradually ends its quantitative easing policy, and international capital will return to the United States. Second, since the emergence of the Syrian chemical weapons crisis, the Bashar regime and its allies, Russia and China, have difficulty preventing the international community from accessing its internal war. The result is inevitably similar to the Libyan Qaddafi regime. This has a serious impact on China's resource backyards. The demand for steel for production and transportation such as oil and natural gas is likely to be affected. By then, the cost of related products such as petrochemicals will increase, and the cost of medium and high-end steel will inevitably increase.

Financial aspect

Due to the five-year connivance of real estate by the domestic government, or the actual policy of slogan regulation to encourage housing prices, not only steel companies, but most of China’s physical industries have problems with loan difficulties. The dilemma of funding is likely to last for 10 years. The above can only be solved after the so-called reform success. In addition, the author read the news some time ago. "The United States will thoroughly investigate the illegal links between its domestic investment companies and Chinese officials and relatives of the officials. It is aimed at combating unfair competition in the United States." I am afraid this round of US investigations. There is no conservative cover-up behavior, which is another test of the local government after the mid-term performance check. The main basis of the government's financing ability is government credit and local financial situation. Maybe we are not afraid of fire, let us wait and see, but this is still one of the financial risks that exist, it must be prevented.

Climate

This is also the root cause of the initial "Golden September and Silver 10". Usually the climate, capital situation and market demand during this period are suitable for the construction site, so for the steel industry, it is a period of significant demand for terminal demand. In the autumn of this year, the tigers were extremely strong. The temperature in September was still high. In the east of China, the heavy rains alternated, and the construction rate of the construction site was far from the ideal state. It is understood that the national climate can reach a more ideal state in October.

In addition, the Spring Festival in 2014 came earlier than usual, and due to one or more of the above reasons, some projects are likely to be delayed, and how will the remaining limited time be interpreted. Usually this possible delay is also There are quite a few hidden risks.

In summary, the “Golden September and Silver 10” in 2013 faced the dilemma of insufficient operating rate, difficulty in guaranteeing profit margins, closing risks at the end of the year, tightening of funds, and optimism in the long-term prospects. However, with the climate issue in October, the construction site will start to rise steadily. It is expected that the steel price will be strengthened and the volume and price will rise. It is recommended that steel trade stocks in September and October, reduce the bubble, fast forward and fast, safe first, strive for profits, and fully prepare for long-term operations.

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