Weak cost support, weak steel price continuation

Last week, domestic steel production costs continued to decline. According to the cost model, as of May 16, the cost of carbon billet is 3,046 yuan/ton, the cost of tertiary thread is 3,475 yuan/ton, the cost of ordinary carbon board is 3,461 yuan/ton, and the high-line cost is 3,400 yuan/year. Tons, the cost of hot rolling 3.0 is 3512 yuan/ton, and the cost of cold rolling 1.0 is 3875 yuan/ton. The production costs of the above steel products decreased by approximately RMB 18-19/ton from the previous Friday, with a decrease of 0.47%-0.60%.

From the factors that affect the cost of steel production:

1. Raw material market: Last week, raw materials volume was light, steel mills were interested in lowering prices, and prices declined partially. Among them, weak domestic-made mines declined, import mines continued to decline, and coal coke was weak. As of May 16, compared with the previous Friday, the average price of domestic fine iron ore fell by 9 yuan/ton; the average price of imported ore fell by 13 yuan/ton; the average price of metallurgical coke held steady.

2. Shipping market: Last week, the shipping market was stronger. As of May 16, compared with the previous Friday, the freight rates of Brazil-China Capesize vessels fell by US$0.582/ton, and the freight rates from Western Australia to China Capesize increased by US$0.355/ton; the BCI index dropped by 12 points, and the BPI rose. At 143 points, the BSI fell 10 points, and the BDI rose 30 points. It is expected that the shipping market or the continuation will be consolidated in the near term.

Last week, snails fell sharply, spot prices continued to decline, and market confidence was weaker. Into this cycle, SPI has oversold and rebounded, but the market is still lacking, the macro data performance is not good, the property market accelerated adjustment, steel mills are still optimistic about the market outlook is expected, especially in early May, crude steel Nissan innovation high, the end of the financial pressure again , And the cost continues to fall. We expect this week's steel price or weakness to continue.