Steel prices staged "Passion and Summer"

In July 2012, the steel market witnessed a dramatic shift, marking a sharp turnaround that defied expectations. Prices across the board surged, creating what many called "a summer of passion." According to data from the Business Club's steel index, on July 12, the index stood at 932 points—up 2 points from July 11 and 15 points, or 1.63%, from July 1. This was 1057 points higher than the peak in early 2013 (February 21), but still 11.83% below that level. Compared to the 827 points recorded on September 9, 2012, it represented a 12.70% increase. The year-on-year decline for the period from December 1, 2011, to present was 25 points, or 3.02%. Rebar prices also saw a significant upward movement. After 22 days of strong sales, the rebar market experienced a major rally starting late June. Over 22 consecutive days, prices rose by more than 100 yuan per ton, an increase of 3.74%. As of July 12, the average price of 16mm third-grade rebar reached 3,337.14 yuan per ton, up 0.45% compared to July 8. Looking at the futures market, the main contract settlement price of ** has seen a steady rise since early June, following a one-month decline that began in May. After several days of correction, the price started to climb again from June 26, driven by rising spot prices. By early July, the price had hit a peak, returning to levels seen in early May. As of July 11, the main contract settlement price for ** was 3,659 yuan per ton, up 224 yuan from June 26—an increase of 6.52% over 16 consecutive days. The rise in futures prices outpaced the increase in spot prices. The entire steel industry chain—from iron ore to billets—experienced an overall upward trend. Iron ore prices began rising on June 27 and continued for 16 days. By July 12, the average price of 62% iron ore at ports had climbed to 871 yuan per ton, a 5.58% increase from June 27. Billet prices also began to rise in late June. As of July 12, the average carbon billet price in Tangshan was 3,030 yuan per ton, up 3.06% from June 27. The steel market also saw gains across various products. According to the business club’s commodity price report for the 27th week (July 8–12, 2013), 12 categories of steel products saw month-on-month increases, with seamless pipes leading at 1.87%, followed by medium-thick plates (0.94%) and hot-rolled coils (0.86%). Only galvanized sheets declined slightly, by 0.37%. The overall average change for the week was 0.51%. This rally marked the first large-scale, broad-based rebound after four months of decline. One key driver was the drop in social inventory, which fell below the same period last year after 16 weeks of decline. As of July 5, the total stock of five major steel products in major cities nationwide stood at 164.99 million tons, down 411,200 tons from the previous week. Steel mill inventories also decreased, with the China Iron and Steel Association reporting a drop of 874,000 tons from the end of last year. Additionally, some product shortages combined with rising raw material prices—such as billets and imported iron ore—supported steel prices. As of July 11, Tangshan billet stocks had fallen to 552,800 tons, down 63,900 tons from the previous period. While this was a significant drop from the March high of 1,975.9 tons, some companies recently reported increased demand, pushing billet prices higher. Environmental regulations have also played a role. Many steel mills have been forced to halt production or reduce operations due to non-compliance. As of July 12, blast furnace inspections affected the production of molten iron by approximately 650,000 tons, while sheet metal maintenance reduced output by about 400,000 tons. Steel production line maintenance also impacted rebar and wire rod output, with coil screw production dropping by around 50 tons. Despite these positive factors, the steel market faces challenges. According to the latest data from the China Iron and Steel Association, key enterprises produced 1.7624 million tons of crude steel daily at the end of June—a 0.97% increase from the previous period. Nationally, the average daily crude steel output was 2.1812 million tons, up 0.78% from the previous period. Mid-June estimates showed an average daily output of 2.164 million tons, 0.37% higher than the first half of the year. Since mid-May, crude steel production has risen for three consecutive days. The continuous increase in crude steel output tests market demand and creates downward pressure on steel prices. Meanwhile, macroeconomic fundamentals remain unstable. The steel market is not yet solid, especially in the industrial sector, where deflationary pressures persist. Major industries like automobiles and home appliances are in off-season, yet crude steel output has not declined—it has actually increased. This has intensified the supply-demand imbalance. Moreover, China's foreign trade exports have gradually declined, with the growth rate falling by 2% in June. Outside the U.S., other major economies face weak demand, adding to the challenges. Although mechanical and electrical product exports rose by 10.7% in the first half of the year, the growth rate dropped by 3.5% compared to January–May. In June, both import and export volumes of steel products fell month-on-month, and trade tensions in the steel industry continue to escalate. In conclusion, according to He Hangsheng, an analyst at the Business Club’s steel division, steel prices are expected to rise in the short term, but the pace will be limited. The first half of next week may see further gains, followed by a potential correction. The market remains flexible, and a complete reversal is not likely. However, the room for decline is also limited, and the market is expected to remain volatile through July and August. Investors are advised to monitor production cuts and maintenance activities in steel mills.

Prefabricated House

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