Why have steel prices soared so fast recently in China?

As a member of steel pipeline industry,many clients asked us why the price so higher for the steel pipes,pipe fittings,flanges and other related piping products.That is because the steel prices have soared so fast recently.Let’s see the detailed reasons.

Generally speaking, the price of steel is determined by a combination of factors such as supply, demand, cost, and external environment. Qu Xiuli, vice chairman and secretary-general of the China Iron and Steel Association, said that since this year, high demand superimposed on the high cost of raw fuel materials, international monetary easing policies, environmental protection and production restriction policy requirements, capital market speculation and other factors have promoted the rapid rise of steel prices.

From the demand side, demand from downstream industries such as construction, automobiles, machinery, and home appliances has released relatively quickly. In the first quarter, the actual steel consumption of the main steel industries increased by 47%, of which the construction industry increased by 49%. Rebar continued to become the largest inventory reduction category. At the same time, foreign steel demand has gradually improved, and the strong export growth of mechanical and electrical products has significantly driven steel exports. The climate conditions in the second quarter were good, and it was still in the peak season for steel consumption.

Steel price continue to rise crazily

On the other hand, the dual control of production and production capacity, as an important measure to implement my country’s carbon peak and carbon neutral goal, has increased the market’s expectations for production reduction.

On April 28, the iron and steel import and export tariff adjustment policy was implemented to guide the iron and steel industry to reduce crude steel output. Just after the May Day holiday, the new version of the “Implementation Measures for Capacity Replacement in the Iron and Steel Industry” was released, and the ratio of steel capacity replacement was obviously tightened.

Cost is another important factor supporting steel prices. In order to stimulate economic recovery, monetary easing policies have been implemented around the world, which has led to a general rise in commodity prices. At present, the prices of raw materials such as iron ore, scrap, coke, and coal for steel production are still at a high level and are on the rise.

Behind the “hot” steel prices are more crazy stones. On May 7, China’s iron ore price index showed that imported iron ore exceeded US$200/ton, a record high.Luo Tiejun, vice chairman of the China Iron and Steel Association, believes that the main reason for the high iron ore price is the high concentration of the supply side, and the dominant power is in the hands of the seller. In addition, market expectations and hype are large.

Wish all our clients could understand the current situation happened in the Chinese steel market. Haihao Group would always try our best to provide the best piping products at reasonable rate. Email:sales@haihaogroup.com