Steel Mareket: Crude Steel Production May Set a New Highs for the Year in Late April
Since early March, seasonal recovery in steel downstream demand. Although the short-term fundamentals of the steel market is moving towareds a conducive to the development direction of steel mill, but also to see the supply pressure increases risk of future steel market.The judgment is mainly based on the fact that the analysis:
1. Steel mill profit margins improved. Since January of this year, iron ore, coke and other raw material prices have been declining. Raw materials prices fell dramatically improve the steelmaker’s profitability. In the medium and long term, 2014-2015 is the world’s iron ore production capacity in the peak of production, which means that in the future steel mill will have greater degree freedom in raw material purcasing cost controling. In addition to the cost factor, recently general increase of steel ex-factory price expanded steelmaker’s profit margins to some extent. Objectively, the improvement in profit margins is easy to push production enthusiasm of steel mill.
2. Seasonal nature of steel production. 2014 January-March, the national average daily crude steel production respectively was 1,983,200 tons, 2,035,000 tons and 2,088,200 tons, the highest level in the same period, over last year respectively increase of 67,400 tons, 27,000 tons and 14,800 tons. In recent 4 years the average daily production change of the seasonal pattern, the annual 4-5 months, the average daily crude steel production were gradually increased, reaching high stage.
On the whole, average daily crude steel production in April compared with March will increase, average daily production is expected 216-220 tons in late April, could not only hit a new high this year, but also a record high over the same period.
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