Steel Price Decline “Endlessly” at start of 2017

Due to manufacturing accelerating and export amount drop down overall, steel price decline “endlessly”.

Domestic steel price decline for all the steel products

The National policies has remove all substandard steel, and  reduced production capacity with more effort. The steel price experienced shot-term increase, then starting to reduce gradually.

By the 11th of April, the steel product steel billet offered 2900 CNY from Hebei Tangshan district. Compared to 19th March of 3300 CNY,the price has reduced more than 10%.

Among all the steel products, the steel billet price wasn’t the largest decline. Economic Journalist by 21 century report that the  hot rolled steel coil and iron ore price has reduced about 20% in last 3 weeks.

The situation is totally different from the last year at the same time. By the secondary-half  of April in 2016, steel billet price offered 2500 CNY/TON. Compared to 1500 CNY of the February has increased about 70%.

Reason for steel price decline

By the Journalist from 21st Century Economic Report, the emergence of the above situation has related with manufacturer’s production accelerated. Steel exports reduced a lot, and worldwide shows oversupply condition. On 11th of April, Hebei Tangshan district’s blast furnace operating rate more than 90%. This shows that the local steel products producing is still fast.

Data showed that our domestic steel production capacity is 2.823 million tons from January to February of this year. It increased 4.1% than the same time of last year. Export steel reduced 25.7% compared to last year at the same time.

Steel price declined more than 10% to 20% in last three weeks

According to the government report of 2017, this year have to reduce 50 million tons steel production capacity, which is 5 million tons more than last year of 45 million tons. Additionally, by the July of this year, China will removed all the substandard steel, which means duty of reducing capacity is heavier than 2016.

But big increase for the steel price brought by reducing capacity seems no longer continued. About 21th of April, 2016, steel price of Hebei Tangshan and the whole nation steel market reached to the top point since one year ago, but steel price was continued to reduce from March this year.

For example in 11th of April, besides Hebei Tangshan district steel billet price reduced more than 10% compared to March 19, steel bars in HRB 400 / ASTM A615 GR60, price also reduced more than 10% compared to March 17. As the hot rolled steel coil and PB powder(a kind of iron ore), their price offered 3180 CNY, 565 CNY separately on 11th, April, reduced more than 20% compared to the top price of 3830 CNY on February 28th, compared top price 715 CNY/TON on 22th February, reduced more than 20%.

Policy to reduce substandard steel may cause steel plates, steel pipes, hot rolled steel coil and other steel products’ price increase.

As the policy plan is to reduce production capacity million tons of substandard steel, it will cause the steel shortage probability, price will increase correspondingly, but at present the case is not considered like this.

Analyst Chen Kexin considered that the contradiction may related with the progress of reducing capacity. And more reasons exist at the same time.

Manufacturers speed up producing caused over capacity

Why the price of steel turned down ward? Fundamentally speaking, the product is still oversupplied.

Many factors related with the steel price, there shall be a significant fluctuating on the steel price this year. ” The most important factor is the progress rate of reducing production capacity, and determination of cutting out the substandard steel product.” Chen Kexin said.