Steel price in China market going up crazily and Globally steel price at high level

Hot roll futures market new high 5400rmb , its pretty high price, and it cause the new going up of stock price, hot rolled steel coil price can reach about USD900//Ton FOB 

Risk Number One: The Rumor on Chinese Steel Export Debate Change

Marketers are suggested to pay attention to the change of steel export debate. The policy may be released on April 1. If there is one month for the policy to be implemented, it will be positive for market, as mills will try best to increase the export by any means. With the possible debate reduction (13 percent to 9 percent, or 11 percent to 6 percent), the equivalent price will be 300 RMB per ton. The move will be beneficial to international market as well, as the cut in Chinese steel export debate means the rise of import cost for non-Chinese steel buyers. However, the policy may be negative if there is no demand from seaborne market for Chinese steel products.

In short, the policy will be positive if there is one month ahead. If not, the market will be falling.

Risk Number Two: The Sino-US Talks

Few researchers or analysts in Chinese financial market had deeply discussed the Sino-US talks. Or most of them were moderately optimistic toward the dialogue, ambiguous about the restrictions from Biden administration against China’s development.

Risk Number Three: Price Collapse to Happen After the Price Surge Due to Production Cutbacks

The policy such as carbon peaking and carbon neutralization may be positive to steel price this year. If Chinese crude steel production decreases by 10 million tons, it is equivalent to the cut of 20 million tons of steel exports. However, I assumes that China’s steel demand this year will rise by 20 million tons.

At the moment, raw materials prices have collapsed. For instance, the 2105 coke futures contract, traded in Dalian Commodity Exchange, has slid from the peak of 3000 RMB per ton to 2200 RMB per ton, and 2105 iron ore contract has plummeted from 1180 RMB per ton to 1050 RMB per ton. In comparison, steel market is climbing up.

As what I said in 2008 when global financial crisis hit the world, RISK is generated by price rise, while OPPORTUNITY is created from price drop. The higher price rises, the bigger the risk grows.

The price collapse for steel market may be the third risk.