Short-term steel price or weak operation

Last week, domestic steel production costs continued to decline, but the decline was narrower than the previous week. According to the information cost model, as of March 8th, the domestic production cost of major steel products fell by 30-32 yuan/ton on a week-to-week basis, a drop of 0.66%-0.85%.

From the factors that affect the cost of steel production:

1. Raw material market: Last week, the willingness of the steel mills to purchase was still low, and there was a phenomenon of keeping the prices down. The raw material turnover was not good, and the price fell partially. Among them, the domestic mines were weaker and partially falling in the south and strong in the north, and the imported ore fell first and then stabilized. As of March 8, the average price of domestic refined iron ore fines fell by RMB 4/ton, which was a decrease of 0.42%, and the average price of imported ore was Fell 11 yuan / ton, a decrease of 1.08%; In addition, Billet consolidation, scrap part lower, weak coal stable.

2. Shipping market: Last week, due to the boost of South American grain export season, the international dry bulk market continued to pick up and the four major indices rose across the board. As of March 8th, the BCI, BPI, BSI, and BDI indices rose by 19 points, 88 points, 83 points, and 67 points respectively on a week-to-week basis, and the gains continued to increase. In addition, the freight rates from Brazil to China's Capesize decreased by US$0.005/week. In ton, the decline has narrowed significantly; freight rates from West Australia to China's Capesize have increased by US$0.086/tonne on a week-on-week basis. Freight rates from India to China's Panamanian vessels remain stable. It is expected that the international shipping market will continue to be strong in the short term.

Last week, mid-plate and cold-rolled inventories decreased, but thread, wire, and hot-rolled ingots continued to increase. As the overall release of downstream demand remained relatively slow, market inventory pressures did not improve significantly. In addition, steel mills lowered their ex-factory prices The continuous snails continued to weaken and the production costs of steel products continued to decline. It is expected that the short-term steel prices may be consolidating within a narrow range.