The contract price of imported iron ore in the fourth quarter may have a dilemma for a small drop in construction steel prices.

According to the average of the Platts Index during the first three months, the spot price of imported iron ore has dropped slightly, which may cause the contract price of the fourth quarter to enter the downtrend channel. But even so, the raw material cost of steel is still at a relatively high level, supporting the spot steel price. According to the latest market report provided by the well-known steel spot trading platform “Nishimoto Shinkansen”, the current spot price of construction steel is in an entangled state, and the rise is not, nor is it falling, because the support and suppression factors are at the same time working.

Steel prices are mixed

According to the agency's monitoring, the Shanghai Construction Steel Market retreated within a week. As of the 19th, the Xiben Index reported a price increase of 30 yuan per week at a price of 4,850 yuan per ton. At present, the tonnage price of representative quality rebars for secondary rebars in Shanghai is adjusted to 4,780 yuan, up by 20 yuan a week; the offer price of premium rebars in Shanghai is adjusted to 4,880 yuan per ton, up 10 yuan per week. Insiders believe that after entering in August, the domestic construction steel market trend is even more tangled, frequent changes, but the rate is not large, the overall market situation is "a dilemma." On the one hand, under the influence of the US debt crisis, the entire capital market fluctuates frequently, and the sentiment of the spot market merchants is also relatively fragile, which is sensitive to the macro-message level. On the other hand, the current steel stocks are still at a low level, coupled with the resources of businesses in the hands of The high cost of holding goods has restricted the space for falling steel prices.

At present, the steel market has a general demand, but the total amount of inventory is not high, and the output has picked up again. According to the latest statistics of China Iron and Steel Association, the average daily output of crude steel of 76 key steel enterprises in China in August was 1.631 million tons, which was a month-on-month increase of 1.24%. Based on this estimation, the average daily output of crude steel in the country in early August was about 1.941 million tons, which was a month-on-month increase of 0.35%. However, generally speaking, the crude steel production in early August had little change compared with the second half of July. In some regions, the production of steel mills was limited by electricity, and the release of production capacity was somewhat inhibited. At present, the profit margin of construction steel manufacturers is still considerable. After the plate manufacturers raise the ex-factory price in September at Baosteel and Wuhan Iron and Steel, the profitability is expected to improve. It is unlikely that the domestic crude steel production will fall significantly in the later period.

High price shocks

The rise and fall in the cost of raw materials such as iron ore is also in between the two. According to estimates of the “Nishijin Shinkansen”, the current production cost of rebar with an annual production capacity of more than 10 million tons of steel is approximately 4,599 yuan per ton, and the annual production capacity of 5 million tons to 10 million tons of steel rebar production costs is approximately one ton. At 4515 yuan, the production cost of rebar with an annual production capacity of less than 5 million tons of steel is about 4,445 yuan per ton, and small and medium-sized steel mills apparently still have certain advantages in terms of cost.

It is worth noting that, as of August 15, Platts' average price of iron ore for the past three months has dropped to US$174.8 per ton, which is a drop of US$2 per ton compared to the contract price in the third quarter. Judging from the current trend of market operation, it seems inevitable that the contract price of iron ore will decline slightly in the fourth quarter, and the cost pressures of large and medium-sized steel plants will be slightly reduced later. However, on the whole, the pressure on the upstream cost of steel is still relatively large, and there is still support for steel prices.

Institutional analysts analyzed that the phased characteristics of the steel market, which is “up and down, small, or dilemma,” will continue. In the beginning of August, the volume of terminal purchases did rebound, but then the shipment volume fell for the second consecutive week, and the market sentiment tended to be light. At present, although the market has a certain expectation for the upcoming "golden nine silver and ten silver" consumer season, end-users often choose to use the purchase strategy when the steel price is continuously consolidating and the cost of capital is high. enlarge. At the same time, there are many uncertainties at the macro level and the market's mentality is relatively fragile. At present, the relatively stable steel market basically depends on two factors: high cost and low inventory.