The analysis of the impact of Sino US trade war on China’s steel market

The analysis of the impact of Sino US trade war on China's steel market

President Trump signed the presidential memorandum 22 days, according to the results of the “301 investigation”, to import goods from China on a large scale to impose tariffs, and to restrict Chinese enterprises to invest in the United States and mergers and acquisitions. Before the signing of the White House, Trump told the media that the scale of Chinese goods involving taxation amounted to US $60 billion. Among them, 25% and 10% tariffs were imposed on imported steel and aluminum products respectively. This was a 3426 drop of 5.44% in the early afternoon of March 23rd, while the 1805 newspaper and 3559 fell 4.79%; the iron ore 1805 and 444 fell 5.13%; the coking coal 1805 declined 4.35%; the coke 1805 contract was strongly oscillating in the early market.

Through the futures, it can reflect the basic phenomenon of the emergence of the goods market, which will cause a huge margin situation for China’s steel exports. Under the high pressure of export, the domestic steel trade will be weak, and the price will be pushed down.

1, price aspect

Some steel enterprises show that at present, the blast furnace is now in the condition of reproducing. It is expected to restore a certain production capacity in early April, but most of the steel enterprises will continue to limit production according to the ratio of 10-15% in the period of no heating season. The reproduction of BF in Tangshan will be carried out according to the production plan of each steel plant, and the production capacity will be carried out. Step release, however, the demand for steel strip in Tangshan area does not have large demand, the market has a certain supply greater than demand, and the city is also an important factor in the slow increase in price.

With the arrival of spring, demand recovery, the full steel market should be depressed under the pressure of successive diving, the downstream manufacturers in the swing of the period of panic is uncertain, the overall terminal procurement volume prudently tightened.

2. Inventory

The increase in the stock and social stock of the steel plant shows that the downstream terminal is not very active in the production of the goods, and the Spring Festival is a little later than the previous year. The downstream site has not been fully resumed. In addition, after the March 15th, the heating season is relieved of the environmental protection limit, which makes the start rate gradually increasing and the stock needs to be digested. The start of Sino US trade war has also resulted in the rapid tightening of steel prices, making it harder for the market to outsource supply.

3. Summary

At present, the Sino US trade war has made new progress in March 26th. The prime minister made the latest statement on behalf of the Chinese government in the evening news broadcast. First, the prime minister said that the door of China’s opening to the outside world will be bigger and bigger. This is the prime minister’s characterization of the trade war and the highest official position of the Chinese government.

China’s economy needs to complete the transformation of export oriented to domestic demand as soon as possible. China should not keep pace with its steel manufacturing industry. Meanwhile, the manufacturing sector should also strengthen the transformation and upgrading. In 2018, the Ministry of industry and information industry pointed out that in the work plan of China’s steel industry, the key areas will be carried out to dispose of “zombie enterprises” and to be removed. In the report of the government work this year, we put forward that in order to consolidate the results of the war of blue sky, it is only in the process of optimizing the capacity, accelerating the industrial transformation, and having a high comprehensive national strength to get the right to speak on the Sino US trade issues.

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