The cost of the hottest steel is rising, and the a

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The cost of iron and steel is rising, and the advantages of large-scale monopoly steel enterprises are obvious.

the cost of iron and steel is rising, and the advantages of large-scale monopoly steel enterprises are obvious "

China Construction Machinery Information

Guide: the iron ore negotiation mechanism that has lasted for 17 years has in fact been broken. If the pricing mechanism required by the three major mining companies comes true, it will greatly increase the cost of iron and steel companies. At the same time, the iron and steel industry is already facing the dilemma of downstream demand slowdown and weak cost transfer. How long can the iron and steel industry boom last?...

the iron ore negotiation mechanism that has lasted for 17 years has in fact been broken, and the three major mining companies If the pricing mechanism required by mining companies comes true, it will greatly increase the cost of steel companies. At the same time, the steel industry has faced the dilemma of slowing down downstream demand and weak cost transfer

how long will the steel industry boom last

on July 15, BHP Billiton and Rio Tinto of Australia reached a contract price increase of 71% for iron ore this year with European steel mills, which is far lower than the 96.5% increase just reached with Chinese steel enterprises. As soon as the news came out, domestic public opinion was in an uproar, and domestic investors' pessimistic attitude towards the steel industry was further intensified

qixiangdong, Deputy Secretary General of China Iron and Steel Industry Association, is deeply worried about the pessimistic atmosphere in the market. ZhouXiZeng, steel industry analyst at CITIC Securities (600030), also said that investors should not take a pessimistic attitude. Insufficient supply will maintain a bull market in the steel industry

subsequently, I interviewed some domestic steel enterprises and industry analysts, and they had great differences on the development prospects and risk judgments of the industry. However, whether optimistic or pessimistic, the focus of the industry is still focused on iron ore negotiations, whether the steel price can continue to rise, export policy adjustment and other issues

will the iron ore negotiations be worse next year

after Baosteel announced that it had reached a price agreement with Rio Tinto on the increase of 79.88% in fine ore and 96.5% in lump ore in 2008, the relevant person in charge of CISA made a speech on the iron ore price negotiation, affirmed the price agreement reached between Baosteel and Rio Tinto, and said that it had maintained the current international iron ore price negotiation mechanism. However, the agreed prices between Australia and European steel mills announced shortly after that broke the bottom line of the price negotiation mechanism claimed by CISA

Huang Jing, an analyst at United Securities, pointed out that the results of this year's negotiations are closely related to the merger of the two expansion projects. At the beginning of november2007, BHP Billiton sent a letter to Rio Tinto, proposing to purchase it by exchanging three BHP Billiton shares for one Rio Tinto share. In June, 2008, BHP Billiton began to submit applications to antitrust regulators in Europe, the United States, Australia, Canada, Chinese Mainland, Japan, South Korea and Taiwan, China for the acquisition of Rio Tinto with us $170billion, and then through the calculation and processing of software programs to obtain the final research data desired by users

although the US antitrust watchdog has partially approved this application, the European Commission has extended its antitrust investigation into this incident, and the German Industrial Union has urged the European Commission to oppose the merger of the two extension projects. For BHP Billiton, requiring European steel mills to accept an increase higher than that of Brazilian mines would directly violate the anti-monopoly law of the EU. Therefore, it is undoubtedly necessary to reach an agreement with European steel mills on the same increase as that of Brazilian mines

Huang Jing also believes that in the face of BHP Billiton's acquisition, Rio Tinto's introduction of white knight may be a good choice, so it is undoubtedly a good move to give ArcelorMittal a lower increase than that of Asian steel mills

however, some analysts pointed out that this year's negotiation results have announced the complete collapse of the 17 year international iron ore negotiation plan, which focuses on the development of carbon fiber and its composites, advanced semiconductor materials, superalloys, new display and its key materials, new military materials, special alloys for high-end equipment, and new rare earth materials. Under such circumstances, the outcome of the global iron ore negotiations next year faces great uncertainty. In fact, the three major mining companies have strongly expressed their desire to build a new iron ore pricing mechanism

according to them, the future iron ore price will be determined by the CIF iron ore price index rather than the previous annual negotiation. In fact, if so, it will mean that the cost of domestic steel enterprises will face a huge increase again

for this reason, CISA strongly opposes this pricing mechanism. CISA's statement is very tough: "this violates the basic principle of determining prices according to the market supply and demand relationship. It is inappropriate and unfair to deviate from the current reality of international iron ore seaborne trade, and is not conducive to the establishment of long-term and stable cooperative relations between the supply and demand sides."

however, investors should not ignore that in the face of the three major mining companies that control 70% of the global iron ore trade volume, once they reach a consensus, CISA has no convincing alternative. People from the iron and steel division of Fosun Group and Baosteel and other enterprises said that although the old form of negotiation still has room for survival, it is a foregone conclusion that prices will continue to rise next year, and the pressure on iron and steel enterprises will be difficult to eliminate

has the rise in steel price reached its peak

a sales manager of Tangshan Iron and Steel Group disclosed to him that the recent steel price growth has slowed down, and even has a downward trend. Many traders and downstream enterprises are cautious. However, he mainly referred to the North China market. As the Olympic Games is approaching, many enterprises have stopped production, and transportation has also been affected. "Generally speaking, everyone should be much more cautious than at the beginning of the year. Now is the off-season, and many traders are bullish on the second half of the year." He said

it is understood that since March, the steel price has continued to rise. Although the increase has dropped, the overall price remains high. As of June 23, CISC's comprehensive price index was 161.47, up 72.3% from the beginning of the year. The steel price was briefly adjusted in early June, but it has stopped falling and rebounded recently. ZhouXiZeng judged that the price will remain high due to the tight balance of domestic steel supply and cost driven in the future

zhaozhicheng, steel industry analyst at Anxin securities, attributed the rise in steel prices to supply contraction and rising costs. In his opinion, the rise in steel prices since the middle of 2007 coincided with the decline in output growth, which probably means that demand is not the leading factor driving up steel prices. Since 2007, with the slowdown of global industrial production, the growth rate of apparent steel consumption in other countries and regions has also continued to decline. The growth rate in April 2007 was 12.0%, and in April 2008 it has dropped to -0.8%. Without the acceleration of demand, the supply contraction broke the balance of supply and demand of the industry, and the steel price rose

the rising cost is another factor pushing up the steel price. Since 2008, the scrap prices of major steel producing countries in the world have risen. As of june13,2008, the price of scrap steel in the United States has increased by more than 50%, that in Europe by more than 130%, that in Japan by more than 70%, and that in China by 42.9%. The increase of scrap steel in Europe and the United States has exceeded that in China, which shows that the cost of international steel production has increased more, and China's comparative cost advantage has been strengthened

ZhouXiZeng told: "This year, the steel price has risen rapidly and by a large margin. Some investors began to worry that the steel price has reached its peak. However, compared with historical data and foreign conditions, the increase this year is not large, and the current steel price level does not fully reflect its value. If the cycle is prolonged, the current steel price level is only slightly higher than that in 1994 or 2004, and the current cold-rolled and coated plate prices are still lower than that in 2004. Compared with foreign countries, the increase of domestic steel price since 2008 is less than half of that of the international market. Therefore, the current steel price is high, but not the peak. On July 11, hwangeun Yeon, senior vice president of POSCO steel, said, "although consumer spending tends to weaken, industries with large demand for steel products such as automobile and shipbuilding still show strong growth, and the current strength of global steel price rise will continue for at least two to three quarters. "

where is the boundary of cost transfer?

in the profits of industrial enterprises published by the National Bureau of statistics, the total profits of ferrous metal smelting and rolling processing industry increased by 25.89% year-on-year in the first five months. This shows that the profit margin of the iron and steel industry has not been affected too much by the rise in costs, and the rise in steel prices basically covers the pressure of rising costs. It is understood that in 2008, large steel enterprises can basically successfully transfer the cost pressure, and the pressure of small enterprises Larger

however, many steel enterprises and analysts are worried about the sustainability of cost transfer. In fact, there are already hidden worries in the downstream industry. The real estate and construction industries are important downstream industries of iron and steel. In the first four months of this year, the real growth rate of fixed asset investment in the real estate industry has dropped from 27.3% in 2007 to 23.8%, while that in the construction industry has dropped from 14.1% to -12.1%

the automobile manufacturing industry is also an important downstream industry of iron and steel, and the pressure on the foreign market is greater than that on the domestic market. According to the calculation of CITIC Securities, the prices of raw materials such as iron and steel have risen significantly, which is estimated to erode about 12% of the profits of the automobile industry. Automobile companies can cope with this by raising prices (or reducing the price decline), reducing costs, and expanding the cost rate of scale

a relevant person from the iron and steel division of Fosun Group told that the difference in the ability of downstream industries to transfer costs has led to the differentiation of benefits among different steel varieties. The small household appliance industry is relatively weak, so the benefit of thin plate is poor; The shipbuilding industry and heavy equipment industry are relatively good, and the corresponding medium plate has better benefits

"generally speaking, the high cost and tight supply will continue to drive the rise of steel prices. However, the rise of prices to a certain extent will restrain the demand and the continued rise of steel prices. Judging from the current profit growth of the industry, the affordability of downstream industries is OK." Qixiangdong said

large steel enterprises are the targets of defenders

the above Fosun Group told that compared with other industries, the steel industry is still relatively prosperous and in a stable development stage. He pointed out that the main signs to judge the decline of the iron and steel industry are: the price of raw materials has risen sharply, and the price of steel cannot be effectively increased; In other words, the rising range of steel price cannot completely cover the rising range of raw materials. "If about 30% of enterprises can not pass on the pressure of rising costs, it is more likely that the industry will have an inflection point. At present, these signs have not yet appeared." The person said

although the total amount of iron and steel is balanced, there is a lot of room for adjustment from the perspective of variety structure. "Affected by the austerity policy, there is pressure on the internal technological transformation of iron and steel enterprises. The variety adjustment and optimization are facing financial difficulties. Enterprises with sufficient funds have obvious advantages. The expectation of imposing export tariffs has not been eliminated, which has a great impact on enterprises with two ends abroad." These people said

according to the new statistics of its El exis SP 200 injection molding machine, Sumitomo (SHI) Demag plastics machinery GmbH, the customs' most located in Schwaig, Germany, the steel export in June decreased by 340000 tons month on month, down 6.1%, accounting for about 11% of the output. Qixiangdong pointed out that the frequent expectation of export tariff adjustment is not conducive to the development of the industry and may lead to abnormal export growth due to export competition. The State takes a cautious attitude towards tariff adjustment and cannot interpret it blindly

in terms of investment choice, large-scale product monopoly profile steel enterprises have no

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