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Why has the billet price been strong

Views: 3     Author: Site Editor     Publish Time: 2020-11-20      Origin: Site

Since 2020, the overall performance of billet prices has been strong. In the early stage, due to public health incidents, the billet price once fell to a low of 3000 yuan/ton. With the gradual recovery of downstream terminal demand, the overall billet price has risen, especially after April. The price has risen steadily and gradually stabilized above 3400 yuan/ton. Why the price of billet has been strong and the overall resistance to fall is relatively strong, let's take you to find out. 

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1. The price of upstream raw materials increased by 38.68%. There is strong support for the cost of billet

From the perspective of raw material prices, the upstream raw material prices in the black industry chain have been showing strong performance this year. As we all know, my country's iron ore dependence on foreign sources is as high as 90%. Therefore, changes in ore prices have a significant impact on black products. Since the beginning of the year, the price of ore has continued to rise. Up to now, taking Jingtang Port PB powder as an example, the current port spot price is 950 yuan/ton, an increase of 38.68% from the beginning of the year, while the increase of the billet price is only 3.33%. In terms of the price difference, the price difference between the high and low points of the domestic and foreign ore prices during the year was 340 yuan/ton, with a fluctuation range of 55.74%, and the billet price during the year was 440 yuan/ton, with a fluctuation range of 14.67%. The price increase of raw materials is much higher than that of the billet itself.

It is understood that the current cost of billet in Tangshan is 3,353 yuan/ton. Compared with the price of steel billet of 3410 that day, the profit is 57 yuan/ton, and the profit margin has been significantly compressed. At present, the billet cost of Tangshan Steel Enterprise is between 3020-3170 yuan/ton, and the profit is still 300 yuan/ton, but this is mainly because steel enterprises still use early-stage low-priced ore and high-priced ore has not yet entered the furnace, so the theoretical cost and actual There are differences in cost. In the long run, the continued strength of ore prices in the later period is a high probability event. As the pace of procurement advances, the profit margin of billet may be significantly squeezed. "Currently, billet prices are strongly supported by costs, and there is limited room for later price declines, and as costs increase, the bottom price of billets has gradually consolidated." Insiders said. To

2. The supply of takeaway billets itself is tight, and it is still difficult to fill the gap with imported billets

We found that the overall output of billets has increased, and the delivery of takeaways is still tight. Since the beginning of this year, the operating rate of domestic steel companies’ blast furnaces has been at a high level, and crude steel production has continued to increase. According to data from the National Bureau of Statistics, my country’s crude steel production from January to July totaled 59.59 million tons, an increase of 3.97% year-on-year; From January to July, the total volume of billet delivery nationwide was 21.65 million tons, a year-on-year decrease of 13.47%. Especially since the end of June, the production capacity of some steel companies in Xuzhou has withdrawn, and the new production lines of Shanxi steel companies have been deployed for multi-product development. The volume of steel billet delivery has decreased significantly, and the regional price difference of steel billets has narrowed significantly. It is difficult to form long-distance circulation, mostly surrounding circulation. , A billet is difficult to pick from time to time.

In addition, there is a huge influx of imported steel billets, but there is still a gap in the supply of steel billets for delivery. Due to the global spread of public health incidents, the foreign steel industry has been hit, and domestic billet prices have increased, which has caused a large influx of imported billets, mostly from the CIS, Southeast Asia, Turkey, India and other surrounding areas. According to customs data, the total amount of domestic imported billets from January to June was 5.537 million tons, an increase of 5.03 million tons year-on-year. Most of them were sold in Jiangyin Port in the early stage. With the adjustment of the price difference, some imported resources have emerged in Caofeidian Port. Circulation restrictions, the overall supply of steel billet takeaway resources is still tight, and the short-term gap is difficult to make up. To

3. The frequency of production restrictions is relaxed, and the downstream demand for billets has increased significantly

It is learned from business people that since the beginning of this year, the production restriction policy has been slightly looser than that of last year. Before June, the production limit time of billet adjustment enterprises was relatively short. Although the profits of billet adjustment enterprises diverged significantly, the profit of billet adjustment strip steel was more than 100 yuan. run. Since June, the impact of billet adjustment enterprises' production restrictions has increased, but due to the strong price of billet, they still pick a small amount of billet rhythmically as needed, and are currently more flexible in billet procurement methods, increased forward spot operations, and more flexible in dealing with risks , Prepare sufficient blanks for later production. To

According to industry insiders, the overall price of billet is relatively strong, mainly supported by raw materials, and the supply and demand of billet itself are tightly balanced, and billet prices have generally strengthened. In the second half of the year, the tight balance between supply and demand for billets may continue, ore prices are strong, and the overall resistance of billets remains. At the same time, billets have strong financial properties and are adjustable products, which are significantly affected by the international environment and the performance of downstream finished products. On the whole, the overall performance of billet prices will become stronger in the future, and will be slightly adjusted by the regulation of billet spreads.

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