Review Of Trends In China’s Steel Prices And The Factors
Iron and steel industry as the backbone of our country-based industry in national economic development plays an important role. Steel are used in real estate, automobile, shipbuilding, machinery manufacturing, household appliances and other industries, the industrial chain length and involved were self-evident. Therefore, fluctuations in steel prices seems to be the pulse of the human body, affects the operation and development of many industries. Over time, the price of steel has gone through several ups and downs. Following the historical trend of steel prices will make a brief review.
Three down
For the first time, from 107 in early 1997 fell to 81 the end of 2001, down 32%. Prior to this, due to the impact of the macro-economic growth rate steadily dropped, so that steel prices continue downward, although in 1998 and 2001 the state has promulgated a series of fiscal policy to stimulate domestic demand, but for 1997 to 1998 The financial crisis, leading to sluggish external demand, given the Chinese economy a heavy blow, and then to be dragged down steel prices, the decline in external demand, so prices of steel products fell into the long trip and lasted to 2001 end of the year.
Second, from March 3rd, 2005 dropped to 165 on Jan. 1, 2006 109, down to expand to 51%. The decrease is mainly due to excess capacity. In 1996 and 2000 the steel industry’s fixed assets investment between consecutive years of negative growth in 2001 for the first time a 42% growth, reversing the previous slide, steel product prices also will rise, making the steel industry The profits would be enhanced and so the market’s confidence was boosted up, a substantial increase in investment in iron and steel. From 2002 to 2004, appeared in large-scale iron and steel investment, production can be rapid growth, after two years of construction, mostly in 2005 or 2006 put into operation, resulting in excess production capacity at this time.
Third, from June 2008 to 219.9 fell 3 November 2008 the 127.7, the further decline to 72%. Down the rate of this wave is far more than the previous two, but the main reason which caused this crash is caused by the U.S. subprime mortgage crisis, the global economic crisis. The spread of the scope and extent of spread are “rare”, and from the developed Western countries to the new economy, from the virtual economy to the real economy, market confidence was badly hit. With the global economic downturn, as the iron and steel raw materials, iron ore and coke prices were to fall, gradually lost its role in the cost of support. In addition, the economic crisis sweeping the globe, can not stay out of China, China’s steel exports decline, coupled with the real estate industry has entered a downturn, investment growth has also fallen, leading to demand for steel started to slow down accordingly.
Two up
The first time rose from 81 in early 2002, the end of 2004, 165, 104% margin. During this period, the rapid growth of domestic fixed asset and real estate investments also led to a boom in these two areas working together, steel prices steadily upward, but also to promote rapid growth of steel production capacity.
Second, up from 109 in early 2006 to 219.9, or the same doubled again to 102%. The main reason leading to this round up from two factors, one of more than 10% of the national economy to sustained and rapid rate of growth, and urban fixed asset investment grew at a high level operation, thus boosting the demand for steel, the rapid growth. The other is the cost of driving. During this period, as the raw material of steel, iron ore, coking coal and coke prices rise, so as to promote a surge in steel prices.
Behind the inevitable price volatility is caused by a number of factors working together, the steel industry is no exception, affect the price movements of factors, the following main aspects only from a few to analyze.
1. The macroeconomic environment
Iron and steel industry development and international economic and domestic economic growth are positively correlated, a favorable macroeconomic environment for the steel market, the development of a guarantee, the rate of economic growth directly affects the demand for steel of various industries, thereby affecting the iron and steel products prices. By the U.S. subprime mortgage crisis triggered by the economic crisis has spread to Europe, Japan and other countries, leading to shrinking steel demand in China, direct impact on our steel exports. Meanwhile, various macro-economic policy and domestic macro-control steel prices also have a certain extent.
2. The role of cost-push
According to the definition of principles of economics, when supply exceeds demand, prices fell, and when for less than the demand, the price increases. Therefore, the market supply and demand of steel directly affects the price of steel. China is the world’s largest steel producer, its main raw materials are iron ore, China is currently the world’s largest iron ore consumer, so a direct impact on iron ore prices of steel prices. According to statistics, the global iron ore prices rose sharply over the past four years were 71.5%, 19%, 9.5% and 65%, this impact will be substantial increase in steel prices, and because costs increase, so that some enterprises can not withstand this pressure and take measures to limit production cut, so steel market demand, and thus make steel prices.
3. The needs of the downstream steel industry
The scope of the downstream steel industry is very wide, mainly for real estate, automobile, shipbuilding, machinery manufacturing, household appliances and other industries, growth trends in these industries directly affect the growth of steel consumption, and when those industries in poor condition, they will directly affect the demand for steel. For example, in the current global economic crisis is difficult to get rid of the quagmire of the time, the situation of the industry are poor, leading to a substantial contraction of the steel demand, which led to the decline in steel prices.
Forthcoming in steel futures, through analysis of these factors, investors can clearly understand the reason for fluctuations in steel prices, in turn, can effectively avoid market risks
I am an expert from Mp3 Player Manufacturers, usually analyzes all kind of industries situation, such as folding extension ladders , truss connector plate.
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