Japan's earthquake has seriously affected China's steel market

The earthquake in Japan gave rise to waves in the market that was originally calm. While we were impressed by the situation of the Japanese people and steel colleagues, we also made an analysis of the impact of the earthquake on the steel industry. The stock market's recent trade-offs mainly focused on the earthquake in Japan, with steel and steel structure gaining the top spot. Some people in the spot market believe that the inflection point of the steel market will come due to the impact of the earthquake in Japan. Speculation funds do not rule out the use of seismic topics speculation steel plate, but with the impact of the earthquake calm thinking, the market is likely to continue to return to a rational and prudent state.

The earthquake has affected the steel market in two opposite directions: the steel mills in northeastern Japan suffered a suspension of production, resulting in declining demand for ore, and ore prices began to fall. Some people speculated about reconstruction after the disaster and steel and electronic trading rebounded. The speculation of capital on the above-mentioned conceptual sectors is mainly due to the specific impact of the earthquake in Japan. The hype logic is that due to the earthquake, many steel companies in Japan will stop production, which will lead to the rapid decline of iron ore raw materials, while the decline in the export volume of Japanese steel will also lead to higher steel prices, which will benefit domestic steel companies; The seismic resistance of structural buildings is good, and domestic steel structure manufacturers are expected to participate in assisting Japan's post-disaster reconstruction, and frequent earthquakes will also make the steel structure industry highly valued. On the other hand, the short-term rebound of steel and electronic trading in the short-term, there is a speculation component of the price increase, which is in line with the requirements of the rapid decline in the previous period.

The market mainly focuses on the earthquake in Japan, which is likely to be short-term behavior. It is expected that the market will gradually absorb the impact of the earthquake in Japan, and the main focus of the market in the future will return to the domestic inflation situation and economic growth. In fact, as Japan's disaster-prone steel plants are difficult to resume production in the short term, according to industry insiders, demand for iron ore will be reduced by 3.5 million tons per month and coking coal will be reduced by 1.7 million tons in the next six months. Therefore, the view that the price of ore fines is declining More reasonable. However, under the current situation where rescue work is still in progress, the pulling action of post-disaster reconstruction may not be immediately apparent. The moisture of speculation is too high, and it is difficult to increase spot prices. Moreover, the steel mills in the disaster-stricken areas are mainly producing thin plates and medium-thick plates. Therefore, the plate prices in the Asian region are expected to increase in the future. However, due to the poor anti-seismic performance of construction steel in China, it is estimated that it is more difficult to export to Japan.

In general, the earthquake in Japan poses a positive impact on the environment of China's steel industry. The steel companies that have a high proportion of high-value-added products such as Baosteel and Wuhan Iron and Steel have a relatively high level of interest. If the earthquake in Japan affects the output of local steel mills, it is a matter of course that high-end steel prices remain high or even increase prices. However, the WISCO Directorate Office recently stated that the company will not increase the price of silicon steel in the short term. 'It is estimated that the earthquake in Japan will have a psychologically expected impact on China's steel industry. 'It can be seen that its price is still mainly constrained by the domestic market environment.

However, the impact of the earthquake in Japan on the steel industry still deserves our attention. In the short term, its domestic consumption will be reduced, but it will also increase the opportunities for related companies in their export destinations. In addition, iron ore and scrap prices may fall due to the reduction in iron ore and scrap demand, but due to the impact of scrap exports, it will have an impact on international scrap prices; in the medium to long term, post-disaster reconstruction will require large amounts of steel and some manufacturing. After the industry resumes work, it is bound to accelerate production, which may cause a surge in demand during the period and increase the volatility of steel prices. In addition, due to the significant increase in scrap resources after the earthquake, it will also have an impact on international scrap prices. Therefore, for China's steel market, both in the short-term and in the medium- and long-term, whether in Japan, or in China or related countries and regions, we must pay attention to the opportunities that the Japanese steel companies cannot meet.