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At the beginning of the New Year, the news about the price of all kinds of bulk commodities appeared frequently, among which the related reports about the price of iron and steel enterprises also continued refresh. After last year’s sustained rise in iron ore prices, the impact is now being gradually transmitted to downstream steelmakers and more related industries.
Looking back on this round of steel price rise, a more obvious inflection point appeared in the middle and late February. Referring to the Steel House Steel Benchmark Price Index, the index rose from around 110 points to the latest 120 points or so, an increase o
f nearly 10%. Five months after an earlier round of price rises in mid-October, when the index was stuck around 95, it had risen by more than 25%.
For nearly a stage of steel prices continue to rise, there are three main reasons. The first is the impact of the rise in iron ore prices since last year, the rise in raw material prices directly promoted the increase in steel production costs and transmitted to the final steel prices; Second, with the implementation of the global economic stimulus package, commodity prices have generally risen, driven by quantitative easing policies at home and abroad. Finally, foreign steel production and demand mismatch, making the domestic steel exports increased significantly.
In addition to the price, what impact will the trend of decreasing production and increasing prices bring to the whole industrial chain? Upstream, the supply of raw materials or will continue to benefit, more typical such as steel front scrap and other enterprises, profit will be greatly improved. For iron and steel production enterprises, the impact of its future development is more industrial policy changes. Downstream traders are profitable, but processing companies are relatively thin.
Further, with the reduction of production capacity, the consolidation of steel enterprises or will become an inevitable trend. For some of the head of large steel mills may be through the integration of resources, to control their output does not reduce. And the small enterprise must have the strong product market competitiveness and the continuous research and development innovation investment to support. Consolidation behind will be the continuous improvement of industrial concentration.
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