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Some Thoughts On The Rise In Steel Prices
Sep 04, 2018

The recent rise in steel prices should be a normal fluctuation after the operation of the industry has returned to a reasonable interval. However, a series of market changes that may be brought about by the rise in steel prices should also be prepared for a rainy day and effective response.

In July, the China Steel Association's steel price index rose for the fourth consecutive month, rebounded strongly after falling below 4,000 yuan / ton in March, rising to more than 4,500 yuan / ton all the way. The steel industry has finally passed a good day of volume and price increase. Several happy several worry, steel prices continue to rise also let shipbuilding, machinery and other major households with steel costs rise.

How should we view the rise in steel prices?

First of all, we need to see the positive side. Around 2012, the steel industry gradually fell into the situation of excess capacity, continued to slump, prices once "falling endlessly". Since 2016, through vigorous pressure to reduce production capacity, resolutely clean up the "strip steel", the ultimate industry capacity utilization rate has been significantly improved, the relationship between supply and demand significantly improved. In a broad sense, the rise of steel prices is a reasonable return and will contribute to the long-term development of the steel industry, which is also the purpose of promoting structural reform on the supply side.

On the one hand, iron and steel enterprises should remain sober and prevent "overheated minds".

The market warms up so that the steel industry ushered in a valuable opportunity to recuperate, at this juncture, do not be overwhelmed by price increases. We should restrain the impulse of capacity expansion, grasp the rhythm of production increase, and avoid repeating the mistakes of excess capacity. At the same time, we must seize the opportune moment to catch up with things that we have not been able to do and have no energy to do in the past few years. For example, actively revitalize existing assets, dispose of non-performing assets, reduce the occupation of funds, reduce the debt ratio, so as to lighten the battle in the future; and should strengthen technological innovation, improve product performance, expand high-end varieties, with a view to adding impetus for future development.

One of the most urgent tasks is to increase environmental input and achieve green development. This year's "government work report" put forward the promotion of steel and other industries ultra-low emission transformation. Improve pollution discharge standards and implement deadlines. In May, the environmental protection department proposed that the steel enterprises in Beijing, Tianjin and Hebei should strive to complete the transformation before the end of October 2020. It can be imagined that in the next two years, environmental standards will only become higher and higher, supervision will only become more and more stringent, the sooner the enterprise is transformed, the more active.

All parties are willing to make joint efforts to consolidate the hard-won results of production capacity, so that the iron and steel industry really into the track of sustainable and healthy development.


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