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Analysis of the second half of 2010, the price trend in China Valve

    Overall, China's valve market in the second half of 2010 operating environment in which opportunities and challenges, the price is bullish and bearish factors coexist, and continues to heat up direction.

    First, the internal and external demand continues strong.

    This year, booster cables China has maintained strong demand valve growth. The first 4 months of the consumer price index rose valve about 30%. April China Manufacturing Purchasing Managers Index (PMI) industry index, fabricated metal products, electrical machinery and equipment manufacturing, general equipment manufacturing industry index 3 over 60%, reflecting the overall demand for these industries to increase the valve " leading. "

    Consumption from the domestic steel industry some of the major data indicators, 1-April urban fixed-asset investment nationwide increased by 26.1%, the growth rate continued to increase; domestic production of 6.22 million units the valve, an increase of 62%, also showed high growth level; others such as industrial boilers,battery clip metal cutting machine tools, civil steel ships, etc. are the substantial growth in production situation, a significant acceleration over the previous year.

    From the export point of view,tow rope the great world economic recovery this year, market prices rose, stimulating exports of China's sustained valve increased significantly. According to customs statistics, the cumulative 1-April, the national export volume of the valve 1302 tons, up 98.8% over last year. April outlet valve of which 4.31 million tons, growth of 29%, an increase of more than 2 times the amount of monthly export record high after the financial crisis. Main valve products,ratchet tie dowm the April board export 280 million tons, an increase of nearly 5-fold; bar exports 43 million tons, an increase of more than 3 times. Steel exports 25 million tons, an increase of more than 2 times.

    Even if the impact of the economic stimulus withdrawal, the second half of the Chinese consumer strength has weakened valve, but its continued strong growth will not change the situation, the overall consumer price index remains at a high level valve. Baosteel also reflects the domestic leading enterprises, the current order of the full downstream industries, although demand for the automotive industry declined slightly, but eased the shortage of pre-automobile steel contradiction. According to the industry reflected a good valve situation of export orders, and giving priority to export orders. If the first 4 months this year, according to the export data, China's annual export volume of the valve may close to 40 million tons, an increase of 5 percent or so, or even more, significantly higher than previously expected.

    Second, the incentives to exit carefully.

    How China Valve Demand in the second half? A critical factor is the national policy? There is no doubt that with the improvement of the economic situation at home and abroad, and stabilized, in order to hedge against economic overheating, inflation and a rainy day, the state implemented early economic stimulus will come out. However, the present situation, domestic and international economic development and because some uncertainty, the state stimulus policies will be very cautious out. In general, in the second half will continue to implement the proactive fiscal policy and loose monetary policy, while a good grasp of macro-control direction, intensity and rhythm, in particular, to a number of policies to prevent the negative effects of superposition, and always reasonable efforts to grasp the policy .

    Monetary policy, the central bank is expected to be more of a use to adjust the deposit reserve ratio and other quantitative monetary policy instruments. As for the increase in interest rates and other price-based instruments, the central bank will be cautious and careful. Even if the interest rate is estimated to have to wait until after the United States and Europe, until after the price increase is high, and an effort will not be great, as far as possible moderate to avoid investment and industrial production of significant impact.

    Bank credit, 4 at the end of this year RMB loans of financial institutions 43.35 trillion yuan, up 21.96% over last year, although the year has dropped slightly, but the end of last month also 0.15 percentage points higher, indicating that the central bank credit than expected and did not closed tight. Expected in the second half will continue to fine-tune the implementation of this strategy, financial institutions, credit growth is still not small, representing a sharp contraction of the situation does not occur.

    Of particular note is that, as an important part of exit policy, the state regulation of real estate with heavy blows, inhibiting their prices too far too fast rise, the valve market, is actually a bullish factor.

    Detailed analysis of state regulation of real estate's "heavy" content, summarized in two: First, resolutely crack down on hoarding, not housing that has been sold idle land, without compensation; second is to limit the multi-suite may purchase, extrusion speculative bubble. Previous measures to stimulate new construction area, to promote construction; after a measure, prompting prices fall, making the unit of currency purchasing power, and ultimately enable more residents to buy a house, it will also stimulate more home sales and housing construction. Thus, regardless of which piece of content, will promote the construction of housing construction. According to statistics, the first 4 months this year, the national housing construction area of real estate development enterprises increased by 31.7%; housing new construction area of 457 million square meters, an increase of 64.1%, national control measures are showing results.

    If the state regulation of the real estate industry, and ultimately will stimulate the increase of new construction area and construction increased, leading to an increased valve consumption. So, for the valve market conditions, this is certainly bullish factors.

    Third, the additional cost factors that appear.

    Into the second half, China valve enterprises will face higher production costs. Three higher-cost factors will appear: First, the relative early and reserve cheap imports of basic iron depletion, beginning to face higher iron ore prices, the valve will go into a real business during the high production cost. Second-quarter iron ore contract price of iron ore pricing that spot prices will converge. Due to the current spot price significantly higher than the contract price, which means that consumption of the second half of the valve companies iron ore price will rise, but gains will not be too small. Third, in addition to agreement of iron ore prices continue to rise, the relationship between the cost of China's coke price will be the valve rose sharply. As expected by the global economic recovery and China's economic environment of speed, Southwest drought-induced increase in thermal power generation, coal prices will be high during the run, and do not rule out the possibility of further increases. The second half of the recent re-issue the relevant departments of coal supply may be tight again the alarm.

    According to the information, Shanxi, Hebei, and Shandong province in the near future domestic coke production have been held in the coking industry market analysis will lead to price increases in the cost of coking coal and coke prices upside down situation, the five largest coke producing limited production price reached a tacit understanding . May price increase, the main origin of coke prices will exceed 2,000 yuan / ton. Under its influence, in the second half price of coke market Huojin Yang, will become the new valve company costs factors. In addition, if the second half of the national increase in electricity and water prices, the introduction of environmental taxes, etc., will further increase production costs.

    Higher production costs, resulting in a price for the new valve support force. Such as hot-rolled steel products from the current price situation, the future can no longer cover the cost of expensive materials, new factors, requires the market price must be adjusted.

    Fourth, capacity release was inhibited.

    Continued strong growth in domestic demand, China's production capacity of the release valve has three aspects will be inhibited.

    First, production capacity has been suppressed. From the perspective of crude steel this year, 4 months before the national crude steel output of 213.87 million tons, up 25.4% on an annual basis about 6.4 million tonnes, in accordance with the present 700 million tons of crude steel production capacity calculation, capacity utilization has been achieved 91.4%, is an internationally recognized level of the supply tight. Even if China's crude steel production is expected to continue to grow in the future, but no more than 55.4 million tons in April of this year's produce much higher levels. It should be said, crude steel production capacity has been the basic release, although an increase will be higher, but not the second half of the chain growth potential.

    Followed by iron ore supply constraints. Iron ore supply is tight, will be the impact of China's biggest release of the valve capacity constraints. In 2009, excluding China, the world's major steel-producing countries have reduced production of the valve, it is more than 100 million tons of rich iron ore exports to China by the Chinese valve business to digest. This situation will no longer exist this year. Stimulate the economic recovery of the world in Europe, North America and East Asia increase the valve business in 2010, the global iron ore supply gap may occur. Since 2009, some Chinese enterprises have a long association mining valve breach of contract case, it may face iron ore this year, "bottleneck" problems. Tight supply of iron ore will undoubtedly restrict the release of China's crude steel production capacity.

    Once again, the electricity supply constraints. Coal and other energy supply is tight, will affect the power supply. The second half of the country may be limited in some areas electricity, valve enterprises, especially small and medium valve business, as large energy consumption in all regions, will bear the brunt. Power supply, also limit the release of part of the valve capacity.

    Elimination of outdated restrictions. Recent news that the state should use the "iron fist" to eliminate backward production capacity, including the removal of aluminum three ministries, the valve offers high energy consumption enterprises electricity prices, and the elimination and limitation of capacity to implement fare increases. All of these measures, the valve for the backward production capacity constraints, the number should have some effect, right? Demand continued strong in the case of backward production capacity, the valve is suppressed, will help to improve market relations.

    Fifth, market prices bottoming out.

    4,5 Since January, the price of domestic valve periodically callback, primarily for national heavy curb housing prices, the euro zone debt crisis of the panic, and the pre-valve market continued to ascend, accumulated a large number of "floating profit ", traders and investors" can be secured, "due to the psychological and practical, supported by strong demand and increased costs have not changed the fundamentals. Therefore, after this adjustment, the National Valve prices bottoming out and continue to run high. Shanghai is expected in the near future the main rebar futures contract prices close to 4,000 yuan / ton lows, will rebound to 5,000 yuan / ton, nearly 1,000 points for profit.

    Sixth, the valve corporate profits increased significantly.

    Valve prices bottoming out, or even rise further, as well as the increase in production is bound to raise the level of the valve corporate profits. According to National Bureau of Statistics data show that a quarter of major industries in 39 industrial, 38-year industry profit growth. Among them, the valve industry profits rose 338-fold increase in the most obvious. Industry generally worried about double the price of iron ore led to a large area of the valve industry losses did not occur.

    Although one-quarter profits year on year increase in the valve very low base and has a lot last year, but the profit is far more than expected. Expected to benefit from the price increase substantially in the first half and full year profit of enterprises in China will be the valve there was a substantial increase. Maezawa valves such as the first half of 2010 the cumulative growth in net profit compared with a year earlier 6 to 10 times.

    Expected profit of the second half of the valve was significantly higher than their overall level of last year, iron ore prices and other cost increases, the valve will not cause large losses of enterprises.

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