At the beginning of 2016, China’s crude steel production capacity of about 12 tons, plans to cut the annual production capacity of 45 million tons. Specifically, the average monthly production capacity of about 1 tons, the average monthly production capacity of about 3 million 750 thousand tons to. Even if all the cuts are still successful monthly production capacity of 96 million 250 thousand tons. China’s crude steel production is still 37.5% of the average monthly floating space. Therefore, to restrain production of actual crude steel production to almost negligible. This shows that the needs and expectations is a major factor in steel prices in 2016.
In 2016 the “steady growth” and “three to drop a” macro policy, the steel market supply and demand and the actual situation in late 2015 and early 2016 the market is expected to change greatly. July 2016 began to capacity enforcement upgrade, coking coal coke and steel industry capacity to differences in execution, and the manufacturing of steel demand than expected growth, caused by the mismatch between supply and demand of coking coal coke, coke prices soared and then promote, from the cost push steel prices upward.
For manufacturers, strict control of production capacity in the country’s policy is expected to resume production, manufacturers enthusiasm will be hit, to bank loans for the production difficulty increases, the data showed the inventory decline etc.. Since 2016, steel inventories remained on a declining trend in fluctuation. In December 2016 the total inventory of 7 million 530 thousand tons, a decrease of 335 thousand tons, down 4.3%. The steel market total inventory of 6 million 690 thousand tons, a decrease of 298 thousand tons, down 4.3%; the port inventory 850 thousand tons, a decrease of 37 thousand tons, down 4.2%. For investors, the capacity to make strict policy of futures market price becomes more sensitive to feedback on the spot market price to cycle.
5 chemical product prices mainly affected by the upstream cost push
According to statistics, in 294 different types and specifications of chemical products, nearly 80% chemical products in 2016 rose. Among them, led by rubber chemicals. Start in the market prices of chemical products significantly later than coal, steel and nonferrous. Coal, steel and non-ferrous metals prices in the first half of 2016 started market prices. The chemical products prices basically stable in the first half of 2016, especially in the second half of November rose more obvious market. In addition to the market to start with coal, steel and nonferrous in time later than the fundamentals of supply and demand of chemical products has improved, but the improvement of co.. In 2016, the above scale chemical raw materials and chemical products manufacturing value added growth of 7.7%, growth of 6.1% chemical fiber manufacturing industry grew 7.6%, rubber and plastic products manufacturing, respectively, down 1.8 over the previous year, 5.1 percentage points and 0.3 percentage points.
In addition to the fundamentals, but also by the prices of chemical products of crude oil, coal and steel prices, logistics costs increase promote upstream costs rise. In 2016, the crude oil market rebounded at the end of the year, WTI crude oil has exceeded 50 U.S. dollars / barrel mark, or 46.91%. In addition, the devaluation of the RMB exchange rate is the cost of imported raw materials and chemical products rose. For example, ethylene glycol, styrene, PX imports a larger proportion of the products directly affected the cost of imports rose sharply. Coal prices also contributed to acetic acid, propane and other related chemical products prices.
From September 21, 2016 to July 31, 2017 by the Ministry of transport, Ministry of industry and information technology, Ministry of public security, State Administration for Industry and commerce, quality inspection administration nationwide focus on the three “special action”, that is to carry out remediation trucks a year illegal modification and remediation special action illegal road freight vehicle overloading behavior special action, carried out a two-year vehicle transport vehicle joint enforcement action. And the implementation of “transportation vehicle management regulations” strictly in September 21, 2016, the production enterprises can no longer be used by illegal means to reduce logistics costs.
The current price trend of industrial production field
1 industry deflationary pressure has been lifted
In 2016, China’s industrial producer prices (PPI) year on year decline continued to narrow. The September 2016 PPI rose from negative to positive, since the end of the 2012 year since the beginning of last 54 months the decline of the situation, has important symbolic significance, that production tends to ease deflationary pressures. In 2016, PPI fell 1.4%, a decline narrowed 3.8 percentage points over the same period last year. The factors and the new price hikes were -2.6% and 1.2%, the new price factors have positive positive significance to the enterprise production and expected profit. In terms of industries, in 2016 industrial producer prices mainly affected by black, non-ferrous metals, coal and oil prices rise and other related industries.
There is no room to rise 2.PPI chain
In 2017, subject to financial constraints, the operation situation is expected growth in infrastructure investment will maintain a steady decrease slightly. Around the introduction of real estate policies, the real estate cycle into the downward phase, is expected to 2017 real estate investment growth will be lower than in 2016. The real estate adjustment will make the investment and production of household appliances, cement, building materials and other related industries decline. The purchase of small cars and the expiration of preferential policies, automobile production and sales growth will return to normal.
Overall, in 2017 the demand for iron and steel, coal, nonferrous metals, cement and other industrial prices do not support the formation of. There is no significant contraction in the supply side case, based on the price of major industrial products in the current price level to maintain the operation situation of a steady decrease slightly.
Comprehensive judgment, 2017 PPI mom will remain stable or decline, there is no room to rise. But due to the hikes in the PPI year will maintain a rising trend, the annual increase of about 3.5%. Among them, the first quarter rose about 6%.