From February 26 to March 4, domestic steel prices rose in a comprehensive and substantial way. The construction steel index Nishimoto-the steel index closed at 2130 yuan/ton on Friday, a price increase of 50 yuan/ton from last Friday.

 

Last Friday night, driven by factors such as the policy expectations of the two associations, the decline of the US dollar, and the limited production of the Tangshan World Expo, the prices of commodities rose sharply across the board, and rebar and iron ore futures showed daily limits. The prices of billets in Tangshan skyrocketed by 240 yuan/ton on Saturdays and Sundays, and the prices of profiles and strips also generally rose by more than 200 yuan/ton.

 

After entering March, as temperatures rose, construction sites started one after another, and market transactions were relatively active. Intermediaries also actively restocked stocks in the bullish outlook, and overall stocks continued to rise slightly. As of last Friday, the total stock of construction steel stocks in Shanghai was 512.5 million tons, an increase of 0.5 million tons from last weekend.

 

Looking at the national market, from the perspective of the total inventory of five varieties of wire rod, rebar, hot rolled coil, cold rolled coil, and plate, the total national inventory last week was 12.723 million tons, an increase of 50,000 tons. The increase was 0.39%. Overall, national steel inventories increased slightly last week, rebar and hot rolled coil inventories continued to increase, while inventories of wire rod, cold rolled coil, and heavy plate declined. The current inventory level decreased by 3.403 million tons compared with the same period last year, a significant decrease of 21.1%.

 

Qiu Yuecheng, a senior analyst at Nishimoto Shinkansen, believes that as the market shifts to the traditional peak season for consumption, national steel inventories will be expected to turn into a comprehensive decline channel this week. At present, both the market inventory and the steel mill inventory are significantly lower than the same period last year. Low inventory provides favorable conditions for the rise in steel prices.

 

On the demand side, "maintain economic operation in a reasonable range" is the first of the eight major tasks in 2016, showing that steady growth is still the focus of macro policy. Among them, the GDP growth target is set in the range of 6.5%-7%, and the CPI growth is about 3%. Broad money M2 increased by about 13%. This year it is planned to arrange a fiscal deficit of 2.18 trillion yuan, an increase of 560 billion yuan from last year. The deficit rate has increased to 3%, and the fiscal deficit rate has reached a record high. This year, railway investment was over 800 billion yuan, highway investment was 1.65 trillion yuan, and 20 major water conservancy projects were started. The investment within the central budget was increased to 500 billion yuan. The supply side pointed out that this year, we will focus on reducing production capacity in difficult industries such as steel and coal, adhere to market forces, corporate bodies, local organizations, and central support. We will use economic, legal, technical, environmental protection, quality, and safety methods to strictly control new production capacity. , Resolutely eliminate backward production capacity and orderly withdraw from excess production capacity. Take measures such as merger and reorganization, debt reorganization or bankruptcy liquidation, and actively and steadily deal with "zombie enterprises". Improve fiscal and financial support policies, and the central government allocates 100 billion yuan of special awards and supplementary funds, focusing on employee diversion and resettlement.

 

On the market, driven by a series of favorable factors such as the release of production restrictions at the Tangshan World Expo, the Chinese government will increase the lever, and the dollar fell, the price of bulk commodities rose in the night trading period on March 4th. The black futures represented by Shi are all the daily limit. Tangshan billet prices skyrocketed 240 yuan/ton on March 5-6. In early trading on March 7, the price of Tangshan steel billets rose again by 80 yuan/ton. The ex-factory price of ordinary carbon billet reached 2,100 yuan/ton, the highest since late March 2015. New highs and unprecedented market confidence. The skyrocketing futures and billet prices have directly driven the spot steel market. On the morning of March 7, the spot market prices rose more than 200 yuan/ton in early trading, and there was a rare surge.

 

It is worth noting that when the terminal demand has just improved and the market inventory is still in the rising stage, the steel price has risen so much in the short term, which is more the result of the policy expectation on sentiment and lack of market actuality. Demand support, the continuity of the price in the later period still need to observe the start of the real demand in the later period.

 

The policy is expected to be favorable for both ends of steel supply and demand, futures and billet prices have skyrocketed, market sentiment has risen, and short-term spot steel price increases have been inevitable. However, the current rise in steel prices is more driven by sentiment and lacks the support of terminal demand. If the demand cannot be followed up in time, the steel price will face the risk of a sharp decline after a sharp rise.