Steel prices shocked widely in 2019

There is great uncertainty in the Chinese steel market in 2019, and it will be implemented throughout the whole process, which has triggered wide fluctuations in steel prices. First, the direction of the trade war between China and the United States is uncertain. This is actually the big interference factor in Chinese steel market in 2019. On the one hand, the trump administration tried to contain China’s rise by applying extreme pressure, imposing tariffs on all Chinese imports such as square steel pipe to the US and including China as a currency manipulator. On the other hand, the close economic relationship between China and the United States makes trump unable to deal with China’s oppression, so he needs to reach a compromise. Coupled with trump’s frequent inconsistencies, China-US trade negotiations have been plagued by twists and turns.Towards the end of the year, the outcome of the negotiations remains uncertain, despite optimistic expectations.

Second, the economic downward pressure and counter-cyclical adjustment. In 2019, there will be considerable downward pressure on both domestic and foreign economies. The global manufacturing sector will be weak and trade volume of round steel pipe will shrink. Domestic economic trends, macroeconomic data and major economic indicators are also slowing down. Chinese policy makers regulation was intensified, like in many ways, cut interest rates, promote the investment project construction, stimulate consumption, etc., in order to dissolve the economic downward pressure, to ensure the economic operation in a reasonable range. In this case, the steel market’s pessimistic expectations and the actual consumption appear a sharp collision.

Third, China’s steel output of China hollow section has far exceeded expectations.It was expected that the continued strong growth in China’s steel and steel production would become a “spent force” after the reduction of steel production capacity.In addition, thanks to the addition of many advanced production capacity in recent years, China’s steel and steel output continued to grow strongly in 2019. In the first 10 months, China’s crude steel output increased by 7.4% year-on-year, and the output growth of some steel products such as mild steel tube even reached double digits.But overall, the average level of steel prices in 2019 is lower than last year, which is out of line with previous expectations for a small rise. As of Mid-November 2019, the average price of a ton of steel in China was 4,128 yuan, down 6.5% from last year, according to market monitoring data from Lange steel net.