The first quarters of 2020 saw a contraction in profits

In December, the cost index of structural steel pipe continued to rise, changing from 102.0 points at the beginning of the month to 104.5 points at the end of the month, with an average decrease of 2.9% from the previous month. According to the 30-day furnace charge inventory cycle of steel mills, to study the charge cost in December 2019, we need to first analyze the iron ore and coke market in November: The iron ore market fell in November. According to the monitoring data of Lange steel cloud business platform, the average price of 66% grade dry base iron powder in Tangshan is 828 yuan, down 55 yuan or 6.2% from last month. In terms of imported iron ore, the market price of Australia’s 61.5% powder mine in rizhao port was 656 yuan, down 57 yuan or 8.0% from the previous month.

Metallurgical coke market prices fell in November. According to the monitoring data of Lange steel cloud business platform, the average price of second-level metallurgical coke in Tangshan was 1,757 yuan, down 86 yuan or 4.7% from the previous month. Overall, average production costs of round steel pipe continued to fall in December from the previous month as prices for imported iron ore and coke fell in November. The current steel social inventory two consecutive weeks of significant recovery, and seasonal demand fall mutual set off. The range and cycle of rebar steel social inventory recovery is significant in all varieties. According to the monitoring data of Lange steel cloud business platform, as of January 3, 2020, rebar steel social inventory of mild steel tube is 3.015 million tons, 781 million tons more than the end of November 2019, an increase of 35.0%. On the one hand, the rebound of rebar steel social inventory is caused by the falling demand, on the other hand, it is accompanied by the continuous decline of steel prices.

January 2020 coincides with the Spring Festival, construction projects has entered the final phase, the demand for construction steel significantly weakened, and most steel pipe suppliers has started to close around the middle of January, the later market will enter the “no market with price” state. Although many steel mills are currently undergoing annual overhaul, but compared with demand, supply pressure is still relatively prominent, it is expected that the domestic steel market in future will be a narrow shock. In terms of raw material cost, due to the small increase in iron ore and coke prices in December 2019, the steel production cost in January 2020 has increased somewhat. It is expected that the profit space of steel enterprises will be narrowed in 2020.