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Alloy steel pipe merchants' sustenance on the micro-stimulus policy

March 26, 2022

Latest company news about Alloy steel pipe merchants' sustenance on the micro-stimulus policy

For a period of time, the price of alloy steel pipes has fallen sharply. The main factor in analyzing the price drop is not the so-called market oversupply, but the foresight of the world's mining giants: trying to defeat competitors through price wars and maintain their monopoly position and pricing power. Under such a situation, China should seize the opportunity to make good use of overseas low-priced resources, and build a weak sector of the national economy; establish a huge resource reserve and build a "deterrent" for price negotiations; continue to insist on "going out" and actively Carry out the merger and reorganization of mining resources; take these three aspects as China's iron ore resources strategy.


Since the beginning of this year, iron ore prices at home and abroad have fallen sharply. According to customs statistics, in May 2014, the national average price of imported iron ore was US$110.2 per ton, down 17% from the same period last year. Affected by this, the price of domestic iron ore also fell sharply. Market monitoring data showed that the price of domestic iron ore at the end of June fell by more than 20% compared with the beginning of this year.


Analyzing the main factors for the deep drop in iron ore prices, some views attribute it to weak demand, excessive release of alloy steel pipe production capacity, and excessive port inventories. The market relationship exceeds supply, which is of course an important factor triggering the price drop, but it cannot fully explain why the price of iron ore has fallen so sharply. From the perspective of demand, the global iron ore still maintains a relatively high growth rate. This is not only reflected in the recovery of iron and steel production in developed countries, but also in the strong increase in iron ore imports from China, the world's steel producer. According to customs statistics, in 2013, the national iron ore import volume was 819.41 million tons, an increase of 10.2% over the previous year; accumulated in the first five months of this year, the iron ore import volume jumped to 382.66 million tons, an increase of 19% over the same period last year. If no major accident occurs, it is expected that the import volume of iron ore will reach 900 million tons in 2014, an increase of more than 10% over the previous year. Since China's iron ore imports account for a large proportion of the world's iron ore trade, as long as China's iron ore imports maintain a high level, the world's iron ore consumption will not be bad.


It can be seen from this that, sacrificing immediate profits, fighting a price war to clear up competitors, and deter other channels from entering the mining sector to invest in capacity expansion, alloy steel pipes will consolidate their monopoly position in global iron ore production and pricing power in the international market, which is in line with the long-term interests of the world's mining giants. , and the world's mining giants have almost all the advantages of a price war. This is also an important reason why the world's mining giants are full of confidence and insist on fighting a price war, and it is also the underlying reason why the price of iron ore in the international market continues to drop sharply, and the world's mining giants do not take action to maintain it. Based on this, it is predicted that the price of iron ore in the international market will not rebound very much in the next period of time, and it is likely to continue to run weakly until some high-cost ores can no longer support the closure, and some production capacity withdraws from the market. The author believes that the steel market is difficult to pick up, the main factor is the weak downstream demand. Although a series of micro-stimulus policies have recently been introduced on the macro side, and the investment and construction efforts in various places are not small, it will take time to reflect the demand. Therefore, it is difficult for the terminal demand to have a high volume performance in the short term. It can be a temporary hope to quench thirst.

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