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    More good news, steel market tends to stabilize

    It is understood that the prices of some steel products have approached the previous lows, and some positive signals have also emerged on the policy front. Therefore, the power of the merchants to sell may be weakened. Since the end of last week, the good news at home and abroad has gradually increased, and the spot commodity market price has stabilized this week.
    Market trend
    According to the current situation, from the point of view of demand, market transactions are mainly based on pure demand, and transactions are naturally extremely limited. The demand for the middle and the hunter-dealing demand are mostly off-site, waiting for further clarity at the bottom of the signal, and the release of demand in the later period will be more subtle.
    From the cost point of view, following the drop in the price of slabs last week, the ore price also saw an accelerated decline this week, which was accompanied by a sharp fall in the prices of steel mills. The introduction of the price of the dominant steel mills in East China next Monday, or will determine the short-term bottom of the market price, when the business operation or will be more inclined to smooth shipments.
    With regard to capital, with the explosive growth of paper financing, the interest rate for discounted bills has been falling all the way. At present, the discount rate for large-valued silver tickets in Shanghai has dropped to a level of 4.58 baht, but the market still lacks willingness to invest. However, it is worth noting that after the continued exploration, there will be a certain rebound recovery requirement for the next cycle steel, which will help stabilize the spot market in the short term.
    Good policy "cover"
    On Wednesday, Premier Wen Jiabao of the State Council presided over the executive meeting of the State Council to discuss and adopt the “12th Five-Year Plan” of the National Basic Public Service System to study and determine the policies and measures for promoting the consumption of energy-saving home appliances and other products. The meeting studied policy measures to promote the consumption of energy-saving appliances and other products, decided to arrange financial subsidies of 26.5 billion yuan, and start promoting air-conditioners, flat-panel TVs, refrigerators, washing machines, and water heaters that meet energy-saving standards. The promotion period is tentatively set for one year.
    On Saturday, the central bank announced a 0.5 percentage point reduction in the reserve requirement ratio. On Wednesday, the State Council executive meeting decided to start a financial subsidy of RMB 36.3 billion to promote the consumption of energy-saving home appliances and other products. This shows that the government has begun to respond positively to the current weak economic situation. In the later period, the government may introduce more aggressive stimulus policies to ensure economic growth, which will gradually benefit the weak domestic steel market.
    In terms of funds, the central bank’s open market operations this week were repurchasing 90 billion yuan. Given that the amount of capital due this week was only 50 billion yuan, this week the central bank’s net withdrawal of funds was 40 billion yuan, ending the previous seven consecutive weeks of net deposits. However, the central bank’s RRR cut of 0.5% was officially put into effect this Friday, the market funds will be further loosened, and the recent market interest rates have continued to fall. According to the monitoring data, the discount rate for the large amount of bank acceptance bills on May 14 was 4.58 baht, a decrease of 5.95% from May 3rd. It is worth mentioning that although the government is accelerating the relaxation of the credit environment, corporate loan demand is still weak under the current reduction in investment and corporate orders, and it is reported that the new bank’s new RMB loans were close to zero two weeks ago in May. Continuation of the weak credit growth last month. In order to boost corporate credit demand, it is still highly probable that the central bank will further reduce the deposit reserve ratio or even cut the benchmark interest rate.