Experts: Domestic Hot Rolls in March

Since January of this year, the domestic market enthusiasm has seen a sharp increase in the momentum driven by the sharp increase in the prices of raw materials and electronic discs. Since the overall price of the domestic HRC market was relatively low in 2006, the dealers have placed a lot of hope on the market operation in the coming year. Combined with the sharp increase in electronic trading, the market price will rise accordingly. As of the end of February, the ex-factory prices of hot coils are still higher than the actual sales prices of the market, and the prices of some manufacturers are upside down at 30 yuan/ton. The market's unstable factors still exist, but we can still clearly see the development trend of domestic hot coils. With the gradual start-up and release of downstream demand, the domestic hot coil market price will inevitably show a rising trend, but due to the current price Has reached 4200 yuan / ton position, the room for future increases will be very limited.

1. The increase in prices at the beginning of this year was not the result of a substantial change in supply and demand. It was mainly due to changes in the market mentality of market participants and higher expectations for the market in 2007.

The low price of steel prices throughout 2006 made more dealers feel the cruelty of the market, coupled with higher factory prices of steel products, lower actual market sales prices, and steel sales “sold one ton loss of one ton”. The fierce "flesh". Therefore, the mentality of “increasing sales prices and turning losses into profits” has been suppressed to the end of the year. At the same time, the price of electronic discs has risen sharply. As a result, spot prices have also risen by a large margin, thus suppressing the increase in the hearts of dealers. The price mentality erupted with the electronic carrier as a carrier. According to the practice in previous years, the downstream steel companies in the near end of the year have cut their production or stopped production. Steel consumption should have shown a weak trend. In this case, the price increase is obviously not driven by market demand.

2. The import and export situation is still a powerful barrier that restricts the trend of the domestic hot-rolled market. The news that the export tax rebate has been introduced at any time is different in the market. Export rebate is still an uncertain factor faced by the domestic steel market.

The current situation must be introduced, it is nothing more than a matter of time. If the tax rebate policy is introduced before and after the May 1st, the domestic market will have a buffer period, and dealers can completely avoid the risk of tax rebate by continuing to increase export prices or increase export volume. Once it is true that some people insist on the "can be introduced at any time" situation, the dealer seems to be in a cage at any time, the market mentality is like a frightened bird.

Looking at the current market environment, import and export traders have already evaded ways by increasing export quotation, increasing export volume, and exporting in advance. Now if we continue to adjust, it will be export volume. At the same time, it is also necessary to pay attention to whether the steel that was previously exported to the international market is completely digested. If it is not completely digested, it will cause a return of resources. According to a survey conducted by authoritative domestic agencies, steel products exported to the international market are being used or already used, and steel mills and import and export dealers can relax.

At present, the economic development of the United States and the European Union is still acceptable, and various demands are in a quasi-launch state. Steel exports can be worth looking forward to.

3. The price increase of steel mills and the increase in raw material costs objectively provide a certain impetus for the rise in steel prices. What is more important is the dealer's market mentality and good expectations for the market outlook.

The price of steel mills is the trend indicator of market price trend. At present, Baosteel has introduced the second quarter price policy, among which hot rolled products other than general structural steel are generally raised by RMB 200/ton; meanwhile, Sha Steel is expected to increase the price of hot coil by RMB 100; From the northern point of view, the five steel mills in North China raised the rebar price by 50 yuan. The upward adjustment of steel prices has further strengthened the market confidence of dealers, and the market's mentality is more positive and optimistic. With the start of demand in late March and continuing into early April, market prices will continue to adjust slightly upwards. At the same time, the increase in prices of iron concentrates, billets, nickel ore, and coal, electricity, and oil will all drive market prices higher. From the perspective of the domestic macro-economic environment, the way of domestic macro-control is undergoing a transformation, from the previous repression and suppression of demand to encouragement. The government's macro-control policies have become more mature and rational.

Despite this, the steel market still faces many challenges, such as the central bank's adjustment of the reserve requirement ratio by 0.5% on February 25th, which further reduced the liquidity of funds. At the same time, the loan interest rate has been raised. These are tight monetary measures to control the money supply. Whether for the dealers or the downstream real estate developers, the tightening of funds will have some impact on their financing. However, the central bank also said that the current slight upward adjustment of the deposit reserve ratio is "fine-tuning" and does not belong to the policy "great medicine." Coupled with the export tax rebate policy on the dealer's mentality, although it will not affect the reduction of the amount, although also made more strategic preparations and psychological preparation, the impact of mentality can not be ignored. However, from the perspective of the entire domestic environment, the domestic hot-rolling market will show a steady increase in prices in March. With the gradual start-up of demand, the market will gradually show its birth.
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