Domestic excess steel production capacity to win by price competition

On October 21, major steel and steel mills such as Shagang, Zhongtian, Yonggang, Pingsteel, Xicheng and others issued their pricing policies for construction steel in late October. Among them, Shagang’s Luohu Group raised 30 yuan slightly, Yonggang Group and Zhongtian Steel Group. The plant remained stable, and Zhongtian Steel Factory directly canceled the compensatory fall. Ping Steel also directly lowered its price by 30 to 60 yuan. The price of construction steel in Sha'an Steel in late October sang a negative tone. The market speculated that Shagang had priced Whether the wind vane effect is being lost.

In this regard, analysts at China Steel Spot Network believe that the main reason why Zhongtian and other steel mills can separate themselves from Shagang's own pricing may lie in the fact that these steel mills have sufficient resources and rich specifications. Some agents believe that at this stage, in the subdivided industries of construction steel, the size of these steel mills is almost the same, and there is no doubt that they all want their own right to speak.

Since the rally in September, the current steel price is at a relatively high level. The increase in Shagang’s profits has made it clear that stocks are very clear. At present, its available resources are very limited, which has also lowered its invisible In the industry, the guidance of pricing; and relatively speaking, Zhongtian, Xicheng and other steel mills continue to expand production capacity, internal inventory resources are more abundant, and complete specifications, more end-user favorite, in virtually increased its market discourse right.

The biggest problem facing the construction steel industry at present is the serious overcapacity and the intensified homogenization competition, which forces the competition between steel mills to be more fierce than the competition between steel and other steel types. According to the market survey conducted by China Steel Spot Net, the demand for construction steel in the domestic market currently accounts for about 47% of the total steel demand, which is nearly half; but the output of construction steel such as wire snails already exceeds half, which directly contributes to the supply of construction steel. The pattern of demand, and in this case, because steel such as rebar and steel are the steel products with the lowest technological content, it is estimated that there are thousands of small steel mills in the country that produce similar construction steel products. Because they are relatively inexpensive, they are popular among users in rural areas. The love of the company, which occupies a large number of low-end markets, directly led to the compression of the further expansion of the market share of Shagang and other major steel mills.

In addition to the sharp decline in the overall profitability of the steel industry, domestic construction steels can only choose to win through price competition under the pressure of increasing homogeneity, excess production capacity and excessive inventory. The price competition between steel mills has long been open for a long time. To increase the chaos in the market, resources and complete specifications are undoubtedly the most rigid body, and the recent Shagang, because of severe specs, can only help but choose to increase prices to the market, but due to lack of goods, lack of Based on fundamentals, other steel mills are excited.