Whether you are purchasing a galvanized steel pipe, or you're looking to sell a product that is made of this material, it's important to understand the price change trend of the metal. You may want to know if prices have moved up or down in the past year, and how that trend may affect you.
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China's steel demand may recover in the coming months
Despite a slowing Chinese economy, steel demand in China may improve in the next few months. However, it may take a while for it to make a dent in a depressed market. The market has been affected by global economic slowdown, a property sector crunch and Covid flare-ups.
Typically, September is the peak season for galvanized steel pipe consumption in China. This year, however, the market is still feeling the impact of a record-breaking heatwave and power rationing in factories. That coupled with the government's strict "dynamic zero-COVID" policy has stalled factory activity.
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China's new production targets are testing the bullish resolve of the futures markets
During its annual general meeting in Beijing, Deng Qilin, the president of the China Iron and Steel Association, said the country's steel industry was facing challenges during the 12th Five-Year Plan period. He cited a slowing domestic economy and a sharp drop in demand for steel.
The Chinese steel industry's profit margin averaged 2.91 percent, compared with the industry's average of 3.29 percent, according to the Ministry of Industry and Information Technology. The market's sentiment is also affected by the lack of liquidity in the distribution chain and rising borrowing costs.
Long lead times can lead to price and demand risks
Getting a good to a customer in the shortest amount of time possible is a win-win for both the company and the consumer. While there are many ways to do this, the one that seems to have taken the cake is a combination of supply chain management and automated stock replenishment. Having the requisite resources on hand when a customer needs them is the first step towards improving the supply chain.
Long lead times can be a drag on the supply chain, and the sales process. A shorter lead time can help a company recoup the cost of production, and also allow it to benefit from a forthcoming market influx.
Iron ore prices are expected to remain high in 2022
Despite the recent rise in global iron ore prices, analysts expect them to remain stable in the coming years. The Chinese economy faces various headwinds and the country's largest welded steel pipes consumer is also struggling with real estate woes. However, the major mining companies are optimistic about the long-term outlook. They are looking to develop high-quality products and are not expanding production.
China is the world's biggest steel consumer and accounts for half of the global steel output. The country imports 80% of the iron ore it uses. In 2021, it imported 1.12 billion tonnes of the mineral. The demand for steel has remained flat, although it is expected to fall in the future. The government is trying to address the country's property problems and its heavy debt. In response, it introduced additional stimulus measures, including additional 300 billion yuan in infrastructure spending quotas. It has also attempted to reduce pollution from the steel industry.
US HRC steel price trend was up for most of the year
During the course of 2018, US HRC steel prices saw an impressive run up. This was in part thanks to a tight supply chain and solid demand. However, it was also the result of geopolitical and economic factors.
While the US carbon steel pipe industry is not alone in trying to hold down prices, the market has been more sluggish than usual in response to the lockdowns in China and Covid-19 in Ukraine. The situation has also been weakened by spiralling inflation. In the past six months, demand has been more stable. This should provide some upward pressure in the future.
Pandemic caused a greater demand than expected in the steel industry
During the global pandemic, demand for steel products skyrocketed. The supply of raw materials was constrained. Companies could not purchase as much as they wanted because of strict government regulations. However, after the pandemic, steel prices rebounded.
Steel prices are expected to remain strong in the coming years. However, they will be affected by geopolitical instability, inflation, transportation shortages and interest rates.
The housing and construction industry accounts for almost half of the world's total consumption. In China, it has suffered a slowdown as the country's real estate sector was impacted by the pandemic.
WSA forecast steel demand in China to remain flat in 2022
Earlier this year, the World Steel Association (WSA) issued a "Short Range Outlook" for 2022 and 2023. The report forecasts that global steel demand will continue to grow, increasing by 2.2 percent in 2023.
The report also outlined that steel demand in the United States will increase by 2.1% in 2022. However, the outlook for Europe and emerging economies outside of China was lowered. The report said that the EU would experience a decrease in demand as a result of its dependence on Russian energy. Moreover, the US economy would be hit by inflation and US monetary tightening.
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