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China stainless steel market prices

From September mid-yilai, steel price regardless of spot futures line fell, as currently, futures main contracts has fell to 42,001 line, near one months of time within, steel futures line fell near 700 Yuan, in history Shang is very rare of, due to Futures is spot of vane, futures plunged also joint spot price moments steering, although no futures fell so fierce, but also has near 300 yuan/tons of decreases, what is how of fundamentals changes makes the market appeared so big of reversed? What time to market can stabilize rebound? Combining the latest changes below give you some simple analysis and expectations for everyone to see the recent steel price trends helps.

     macro: internal and external negative accumulate

    CPI growth after the highs reached in July, had fallen nearly two months in a row. Most experts in the industry for a four-quarter CPI trend that momentum will continue to decline, macro-control policies made the M1 down, inflationary pressure under control of liquidity, imported inflation pressure is reduced, leading to rising pork prices will tend to fall before.

     due to the economic downturn accelerated, after October inflation will fall sharply. Due to the lowering oil prices, as well as steel prices falling sharply in October, PPI compared with 4% at the end of the following. Due to over CPI70% of China associated with water, electricity and fuels prices of building materials, 30% and rent-related. The sharp fall in PPI, CPI housing prices will fall sharply. CPI's turning point came in November, possibly falling below 5%. However, the CPI for four months over 6%, has remained at a high level, that pressure is sustained, CPI fell sharply and unlikely in the future, and is likely to remain at a relatively high level.

     September economic data released by the National Bureau of statistics recently showed that in September 2011, the national consumer price index rose by 6.1%. Suggesting inflation remains at a high level with no apparent decline in inflationary pressures still to be reckoned with in the future. Under the high inflation expectations, price stability will remain a priority in the economy in the future. Meanwhile, due to imported inflation pressures remain, therefore, macro-policy is not likely to turn sharply in the near future, most likely at the end of four quarters depending on prevailing market conditions, fixed redirect gradual relaxation of some regulation of the industry policy.

     in a foreign country, United States economic malaise and the European debt crisis continues to be important variables influencing the market in the near future. Fall 2011 American and European economic problems of systemic effects than each of its parts and influence. In the massive monetary and fiscal stimulus measures, after the United States economic growth has slowed, this leaves policymakers with surprise and unease, and force it to consider the problem of failure of policy levers.

     because the United States economy is in a liquidity trap, monetary policy has failed to stimulate the economy. Initially, the market expects a second round of quantitative easing will stimulate the United States accelerated economic growth, and interest rates rise. However, with the acceleration of economic expectations, market interest rates decline, weaker stock markets, capital flows to cash assets.

     tries to buy long-term Treasury bonds and sell Treasury bills of the Federal Reserve's "operation twist" (OperationTwist) to push down long-term interest rates. However, in the case of high-credit borrowers lack of demand for credit, the decline in long-term interest rates is difficult to stimulate the United States economic growth.

     United States fiscal policy is ineffective because, narrow growth means that deficits and debt, fiscal stimulus must be temporary, and after the reverse operation is required. Obama in early September after 2012 of $ 450 billion fiscal stimulus package, and in mid-September made a total amount of more than $ 4 trillion of the 10-year budget cuts on a scale 10 times closer to the stimulus. Reasons for Obama's 2012 fiscal stimulus is to fill a gap in 2011 after the end of the stimulus in 2011 and the fiscal stimulus measures fail to improve United States economic growth.

     from the European Monetary Union and the complexity of the system and the structure view, Europe in the short term it's hard to find a complete solution of the debt crisis, capital controls as the Guide, Greece could in some way in default on its debt this year. This will lead to economic growth in Europe decreased significantly, financial market turmoil, which United States and adversely affect the global economy.

     due to both inside and outside economic contradictions interwoven, macro-control and international economic situation shocks formed resonance, caused due to early inflation factors raised of bullish mentality, by economic cooling, Europe debt crisis protracted, market confidence suddenly reversed, on market rose up to tackle of role, and recently Wenzhou event frequency sent by exposed of funds mess as also in all level gradually evolution, into real estate industry of funds due to property sales not Chang, Funds withdrawn from circulation is limited, when faced with money tight situations, only the short selling of stock on hand to get some liquidity, which is the main direct causes of the current steel fell.

     Mills: up and down squeezing hard

     CISA data shows that in early October crude steel output was 1.9339 million tons, an increase of 0.2% in late September. Since late February, crude steel output more than 1.9 million tons, up from 2010 's daily output of 1.7 million tons. The rebound in production and end of the steel mill began in mid-September on centralized maintenance, some steel mills "11" holiday production contract early production a greater relationship.

     domestic demand to remain normal in the first half, affordable housing and the high-speed rail project for building materials Digest clearly, automobile and machinery industry growth, but demand for steel and raw materials to maintain normal market supply and demand remain weak equilibrium. But at the end of 3 quarters start China PMI index dropped to below 50, Terminal due to fund shortage and industry prospects for willingness to purchase raw materials such as iron and steel decreased significantly. Coupled with the current regulated by constant real estate, especially the launch of two or three cities a restriction order, makes the entire real estate industry suffered a serious blow to the whole market into a slump, and release information from policy makers, macro regulation has not eased, and this trend is unlikely to change during the year. Adsorption and as the funds continued to be the real estate industry, recent real estate price reacts in real estate sales, withdrawal of funding pressure is huge, and near the end of the market prices has been a foregone conclusion.

     from a short cycle, domestic steel demand will accelerate the shrinking trend, formed a strong demand for construction steel-led infrastructure investments after entering the second half of a serious downturn from 2009 the highest 60% rate dropped to less than 10% the second half of 2011, which the railway industry investment or even negative growth; the real estate industry investment continues to decline ; Hopes 10 million affordable housing projects reported operating rate is close to 100%, but funding constraints led to the slow pace of construction, can release steel demand is limited. The contraction of demand, traders sell resource constraints, capital collection cycle longer, thus affecting the market. Wenzhou, due to the recent market Bank loans backed by thorough investigation once again, market chain instantly pull tight, also indirectly affected the steel mill orders, as far as I know, there are some traders because money is tight, in October to order not paid, pause the operation of steel orders.

     and raw materials continued high production cost control of steel causing a great deal of pressure, Mills continued to pressure upstream in the near future, control purchases are intended to lower purchasing prices of raw materials, starting from before the national day, iron ore prices continue to drop, have recently accelerated downward trend. Due to the increased steel plan, coupled with a decline in prices of steel more than. Recently, three mines, one of Vale's initiative to send a letter, saying that given the current iron ore market changes, decided, in accordance with the current price adjustment quarter iron ore price index, fell from US $ 175 to us $ 160 per ton, signal of the global iron ore supply and demand changes are magnified. 63.5% domestic printing powder outside the mainstream price in the $ 165-167/ton, down from highs this year has been $ 30/ton, or 15.38%. Tianjin 63.5% India ore fines price is 1260/wet ton, 62% India powder 1250/wet tonnes. Tangshan acid iron concentrate price of 1070-1080 Yuan/ton, prices fell in the early 30 yuan/ton. At present, steel scrap, pig iron market weakened steadily, reduced costs for steel price support. Baosteel November while leading steel Kaiping, Board policy, but serious market upside down in the market, domestic steel prices later drop probability is large factory prices. Production cost reduction and lower steel prices would further stimulate the market prices continued downward, the late steel mills under a lot of pressure.

     recently of market changes forced mills must take limiting insured of strategy, once spot price of fell of range is greater than raw materials cost of drop words, this part difference most will by Mills bear, and raw materials cost of were mixed often lag Yu spot of were mixed, if not through maintenance way appropriate control Xia production progress words, on will caused not sales on backlog funds, price sales on losses of dilemma, Recent ongoing liquidity crunch in the market has forced steel mills would cut production of insured in the first priority.

     the recent steel price trends forecast

     many bearish factors concentrated outbreak in the near future, resulting in steel futures prices sharply between 49,001 line straight down from the top the current 41,001 lines, extrusion directly from stock price falls, the recent spot prices in the futures slump and falling steel prices squeezed into an accelerated decline, under the channel, in the short term, stock price risk will focus on the release of accumulated. Prices fell sharply during spot but slow-selling, only the sale again, or directly in the futures on the disc surface.

     on the market stabilise what time will stop falling? Author think current need carefully concern two aspects of trends, while is recently by Wenzhou boss run opened of usury shady directly led to Bank rein funds flows, strengthening on pledge of management instead indirect aggravated has liquidity tension, recently temperature Prime Minister to Wenzhou study small micro-enterprise situation, to Guangdong study foreign trade Enterprise export situation,, coupled with November end of December early will held Central economic workshop will tone next year economic development direction, displayed policy in November in the late will will has must change, Because the current domestic economic situation due to the cumulative effect concentration appear, if unchecked, is likely to plunge from inflation to deflation, the domestic economy faces the risk of a hard landing, authorities do not want to see this is policy. Another aspect, paying close attention to current price difference, is now rapidly diving spot to find the end of market price declines accelerated and implicated many invisible inventory sold out, but accelerate the decline in market prices, estimated at about 3800 futures prices will have a certain amount of support, such as 40,001 and stable spot, price differential narrowed to about 200, then long admission there is little risk. Recommendations at the end of November or so watching the market situation, as there are signs of stabilization, you can do more exploratory.