With the economic recovery became more uncertain, the growth in demand will help to ease capacity pressures and ensure a basic balance between supply and demand in 2010 worth looking forward to the steel industry continued to improve. The price of steel by the production capacity, inventory, cost, demand, policy, and psychological impact of multiple factors, combined with steel futures price changes, making fluctuations in the frequency will increase, and difficult to grasp. In general, the trend in steel prices next year will show inverted W-shaped shock state, and different varieties of steel price volatility differences in point of time, stock prices will also be accompanied by fluctuations in steel prices fluctuate.
The demand side, external demand, the 2010 gradual recovery in global steel demand is expected to increase in China's steel exports will initially expected in 2010 China's steel export volume of about 35 million tons, an increase of nearly 50 percent. Domestic demand, according to the country team in 2010 letter to the macro macro-economic data, forecast 2010 growth rate of China's fixed asset investment reached 25%, total investment of 2.478 billion yuan or so. We assume that in 2010 investment in fixed assets price index between 100-102, while the most cautious assumptions in accordance with fixed-asset investment in 2010 dropped 300 tons of crude steel consumption intensity / billion to 2625 tons / billion yuan, while China's crude in 2010 apparent consumption of steel in the range of 6.38-6.5 million tons, an increase of 10% -12%.
The supply side, is expected to yield 6.6 million tons, an increase of 14%, basically flat with internal and external needs. Early 2009, China's crude steel production capacity of 660 million tons, according to China Iron and Steel Industry Association, data provided in 2009, China's crude steel production capacity is expected to add 68.48 million tons; will be put into operation in 2010 to 33.9 million tons of crude steel production capacity. Under the re-expansion of production capacity data, to consider some of blast furnace iron and steel enterprises and backward elimination, by the end of 2009 China's crude steel production capacity of about 715 million tons is expected. Taken together, are expected in 2010 the average annual production capacity of about 733 million tons. At present, China's crude steel capacity utilization level is already at historically high levels, up to 90%, and it is expected that by 2010, China's crude steel output of around 660 million tons, with domestic demand and net exports basically balanced.
Inventories, as of the end of November, China's stock market, the absolute amount of iron ore is still at a high level, long products, plates increase compared with the same period last year were at 100% or so. First, however, is the end of last year is to Inventory of the peak, this year's high growth in last year's low base reasons for that; Second, due to a substantial increase in steel output this year, if we look at the ratio of stocks and yield actually are not high outrageous, is still at a relatively reasonable range.
Raw materials in 2010 was iron ore and other raw material prices will continue to trend higher. Next year's global iron ore demand is for sure. As the three giants controlled 70% of global seaborne iron ore, has a strong capacity control, short-term seller's difficult to change the situation. In addition, the global inflation, depreciation of the dollar exchange rate and so on will affect the price of iron ore and other resource materials. Australia is the world's largest iron ore exporter, is also one of the largest coking coal exporting countries. Reserve Bank of Australia in October as the first to raise interest rates, exchange rate will lead to iron ore and coal prices. From the global steel supply and demand tension extent that in 2010 better than 2009,2008 years, but worse in 2007. Therefore, we expect the price of iron ore a long association will continue to rise, but will not reach the situation in the first half of 2008. Iron ore price is expected to rise 10% -15%, and the gap between the 2007 iron ore prices will not be much.
On the assumption that in 2010 iron ore, coking coal prices are up 15% under the prerequisite of tons of steel raw material costs about 2350 yuan, up up 310 RMB / ton. On this basis, the average price of steel rose 7.16% can be covered by the rising prices of raw materials to reach the 2009 level of profitability. If in 2007 the profitability of the steel industry as a benchmark, according to the spot market price in 2007 tons of steel raw material costs in 2014 yuan / ton, while the average price of 4696 yuan per tonne of steel, iron and steel industry in 2010 to reach profitability in 2007 , then the steel will reach 5031 yuan / ton, up 17.58 percent compared with 2009. From the industry fundamentals, we believe that in 2010 the level of iron and steel industry profits will be better than 2009, but may be weaker than in 2007, therefore, on the assumption that an average of 15% of raw materials under the premise of the space in the steel prices increased by an average 7.16% -17.58% for.
