The hottest steel price in China surged in 2014

In 2014, China's steel prices fluctuated and rose

steady growth, structural adjustment and reform promotion were the three major focus points of China's macro-control in 2014. The three aspects of macro-control complement each other and promote the stabilization and recovery of China's economic growth from different aspects. Stabilizing growth, adjusting structure and promoting reform are the three major focuses of China's macro-control in 2014. The three aspects of macro-control complement each other and promote the stabilization and recovery of China's economic growth from different aspects. It is estimated that the annual GDP growth rate will reach or approach 8%, higher than the growth level in 2013. Affected by this, the national steel demand is better than that of the previous year, stimulating the growth of new resources, especially imports. The price level of the whole year is relatively stable, and there will be no sharp decline. Luo Baihui, chief analyst of Jinmo steel, believes that under the joint influence of various factors, China's steel prices rose violently in 2014, with an overall increase of about 2%. Among them, the annual average landed price of iron ore was about $120/ton, which is less likely to fall sharply. Steel prices continue to rise, which will make the inventory of iron and steel enterprises appreciate, and the benefit situation will be further improved

macroeconomic improvement boosts demand

China's steel demand is closely related to the overall economic situation. In 2014, the stabilization and recovery of China's main economic indicators and the improvement of the internal and external economic environment are self-evident for the boost of steel and raw material demand

the first is to boost the demand for investment and construction. It is expected that China's construction investment in 2014 will be carried out in energy conservation and environmental protection, urban and rural infrastructure, transportation roads, livelihood services, residential housing and other aspects. The construction scale of the above aspects is huge, and the funds required may reach tens of trillions of yuan. Among them, only the urban underground pipe reconstruction, it is estimated that the national investment will exceed 350billion yuan; In terms of environmental protection, the country will invest 2trillion yuan in water pollution control and large-scale investment in air pollution prevention and control actions. Beijing alone will invest 1trillion yuan; The national urban rail transit construction investment will also be as much as 4trillion yuan. Many projects have been approved and will be under construction in 2014. In addition, the national real estate sales and prices rose in 2013, the frequent occurrence of Japanese CDs and Diwang, the good capital situation of developers, and the country's efforts to strengthen the construction of housing projects will also speed up the investment in real estate development in 2014. It is estimated that the fixed asset investment of the whole society will exceed 55trillion yuan in 2014, and the nominal investment growth rate will reach 21%. Such a large-scale investment and construction is bound to stimulate a huge amount of steel demand

the second is to boost export demand. In 2013, developed countries successively revised their early tightening policies, and the primary goal of the government shifted from tightening spending to stimulating growth and increasing employment. Although there is an expectation that the Federal Reserve will withdraw from QE, there is great uncertainty. Even if it does, its scale is very small, its withdrawal time is very long, and other countries will not follow up. Affected by this, the economies of major developed countries will also stabilize and rebound, among which the euro zone will stay away from recession, the U.S. economy will continue to recover, and the Japanese economy will also get rid of deflation; The improvement of economic conditions in developed countries is bound to add impetus to emerging countries. Therefore, the overall situation of the world economy in 2013 was better than that of the previous year, which naturally improved China's export demand environment in 2014. In the second half of 2013, China's foreign trade exports significantly accelerated, which has shown this momentum. The acceleration of China's economy will boost the global economy and generate greater demand for Chinese goods in overseas markets, which will benefit the cycle. It is estimated that the direct export volume of China's steel products will not be less than 60million tons in 2013, maintaining a large-scale level. In addition, due to the indirect export of steel driven by the export of mechanical and electrical products such as automobiles, ships and household appliances, China's total steel exports in the new year will be close to or more than 100 million tons of crude steel

again, it is to boost the production demand of the manufacturing industry. The improvement of both national fixed asset investment and export has derived a large number of urban and rural residents' consumption, which has greatly boosted China's manufacturing industry in 2014, including the demand for building materials, engineering machinery, logistics equipment, household appliances and other manufacturing industries, and increased its demand for raw materials. For example, with the investment in energy conservation and environmental protection, it is bound to promote efficient boilers, expand the application of efficient motors, and develop regenerative combustion technology and equipment. In addition, we should develop technology and equipment for resource recycling and improve resource output rate. All these will significantly promote the rise of the environmental protection and energy-saving equipment manufacturing industry, and stimulate more demand for metals such as steel. After the second half of 2013, the purchasing managers' index (PMI) of China's manufacturing industry continued to rise strongly. In October, China's PMI manufacturing industry remained above the 50 dry and prosperous line, rising for several consecutive months, which also indicates that the situation of China's manufacturing industry in 2014 was significantly better than that of the previous year. Manufacturing has always been an important consumption area of steel, accounting for more than 50% of its total demand. In the new year, the situation of China's manufacturing industry has improved significantly, which is bound to increase domestic steel demand

the last is to boost the demand of enterprises to replenish inventory. Because of the market behavior of buying up rather than buying down, the National de stocking of steel and smelting raw materials began in 2012 and continued until the middle of 2013. Many enterprises' inventories were lower than reasonable water, and some steel enterprises' inventories were at least enough to use ore for a week, or even less. According to the monitoring data of Jinmo steel, at the end of July this year, the social inventory of steel in major markets in China fell by 7.6% year-on-year; In addition, according to the statistics of China Iron and Steel Industry Association, in August 2013, the social inventory of five major varieties of steel in 22 cities across the country continued to decline. Among them, the social inventory of steel in August fell by 7.76% month on month. The heads of some key steel enterprises also said that the sales of enterprises were smooth, and the steel inventory was not much. After September and October, although the national steel inventory has rebounded, because people tend to be cautious about the future market, the inventory will not increase much and is still at a historically low level

with the change of market expectations, confidence restored and strengthened, and prices bottomed out, enterprises are bound to replenish inventories and increase the inventory demand of steel and smelting raw materials in 2014. If prices continue to rise and rise too fast, it will lead to panic replenishment of low inventory enterprises, leading to further expansion of intermediate demand and a short-term reversal of the relationship between supply and demand

in addition, it should be noted that the extremely loose monetary policy widely implemented at home and abroad in the early stage has released a huge amount of liquidity. These funds have not disappeared, but are scattered in all corners of the market, waiting for the best time to enter the market. The bottom of macroeconomic indicators has stabilized and rebounded, consumer demand has gradually recovered, and the market has entered the rising channel. As a member of the country, we are bound to trigger a lot of speculation, resulting in a significant increase in financial speculation demand

according to the scale of China's total demand for crude steel (including direct exports, the same below) of 800 million tons in 2013, even if the demand growth rate fell to 5% in 2014, the total demand will reach 840 million tons, or even more

demand expansion provides supply space

China's demand expansion in 2014 provided a large space for the supply of steel resources. According to preliminary estimates, the national crude steel output in 2014 will reach 820 million tons, an increase of about 5% over the previous year. If the output not included in the statistics is taken into account, the actual crude steel output will be more, which may be close to 850 million tons, thereby stimulating the release of iron ore, coking coal and other production capacity

China's iron ore, scrap and other smelting raw materials are highly dependent on imports, and the expansion of domestic demand is bound to increase our company's output, driving the corresponding increase in imports. With the synchronous start of domestic and foreign demand and the significant increase in the demand for replenishment of inventory, the import growth of raw materials such as iron ore, scrap steel and coking coal in China will be more obvious in the new year. It is preliminarily estimated that the import of iron ore nationwide increased by more than 8% in 2014

generally speaking, the price of steel and raw materials is mainly affected by the demand of the real economy and monetary factors. Luo Baihui said that among the above two factors, the strong demand of the real economy and the increased purchasing power of consumers are the real basis for the high-level operation of the steel market, and the monetary factor is just adding fuel to the flames on this basis. With the recovery and growth of domestic and foreign economies in 2014, especially the active investment in fixed assets such as manufacturing and housing, the demand for the real economy tends to be strong, which will gradually rise to the dominant driving force of the steel and raw material market. Monetary factors such as the withdrawal of the Federal Reserve from QE will gradually retreat to a secondary position, and the resulting future market liquidity impact will be greatly weakened. Because of this, for a period of time, the prices of iron ore, oil, metals and other bulk commodities in the international market have not fallen significantly despite the expectation of the Federal Reserve's withdrawal from QE and the impact of the U.S. debt ceiling crisis, and continue to operate at a relatively high level. Due to the accumulation of three-star research on plastics for so many years, the oil price fluctuates around the price of $100/barrel, Iron ore prices and shipping index even fluctuated upward

it is worth noting that while the demand of the real economy has gradually become the supporting force of steel and raw material prices, the price premium generated by loose money also continues to exist. First, the huge amount of liquidity released by governments around the world in the early stage, mainly the governments of western developed countries, has not been recovered and still exists in all corners of the global market; Secondly, the repayment of principal and interest on astronomical debts must continue to rely on money printing. In this case, even if the Federal Reserve withdraws from QE in 2014, it is estimated that it will withdraw gradually, and will not act too hastily to avoid impacting economic recovery and employment. Other developed countries, such as the euro zone, Japan and the UK, are likely to continue monetary easing

recently, the two parties in the US Congress reached a compromise on raising the debt ceiling, which actually means that the US government will accumulate more debt, which means that it will eventually print more money and continue to release more liquidity to the market. So many over issued currencies have failed to cause a sharp rise in prices, mainly because of the sluggish world demand and people's doubts and even fears about the uncertainty of recovery. Therefore, as the demand of the real economy starts, market confidence recovers, and it is profitable to bargain at a low price in the future, these liquidity will make a comeback and gradually increase the demand for the financial attributes of metals, smelting raw materials, energy and power, transportation costs and other goods and services, that is, the demand for hedging and speculation. At that time, the upward fluctuation of the steel market will change from the previous single demand power to the common drive of two demands

moreover, domestic environmental pollution is serious, which greatly restricts the sustainable development of the economy and the improvement of the living and living environment of urban and rural residents. Therefore, the prevention and control of pollution has become an important goal of macroeconomic regulation and control. Electrician hammer predicts that the environmental protection cost of steel enterprises will increase significantly in the new year. At the same time, some backward production capacity with serious pollution and excessive energy consumption will be greatly restrained, which is also conducive to improving the relationship between supply and demand