Chinese steel prices before the two sessions will not fall or rise in space

2019-02-20 10:28:55 Changyong Metal products Co., Ltd. Read

The first week after the Spring Festival, the domestic steel market prices fell back.On the first day of the New Year's day (February 11), the main contract rose to 3,908 yuan, a new high for nearly half a year, and iron ore futures were once suspended by the daily limit.Spot prices also take advantage of the pull higher around the steel market rising voices.However, good times do not last long, in the case of demand has not started, the night disk that day fell sharply, then all the way down, the formation of "four even Yin".As of the end of the weekend, the snail down 177 yuan, the lowest down to 3593 yuan;Hot coil from a post-holiday high of 3,840 yuan once fell to a low of 3,531 yuan, a decline of 309 yuan.The spot market also showed a high fall, as of the weekend, billet prices fell to 3390 yuan, compared with the post-holiday high of 3520 yuan, down as much as 130 yuan;Although the spiral price bucking the trend for three days, but near the weekend also began to weaken slightly;Plank price drops more than long lumber apparently.Before the first period of all or give up, prices were hit before the Spring Festival level.

Analyst ma guanghui said, because the domestic steel market is still in the post-holiday start before the preparation stage, most of the businesses still have not returned to the market, downstream construction enterprises have not yet large area of rework, so the price is not very significant.

So, what is the future trend of steel city?Can short - term rebound market?Ma guanghui thinks, look from current condition, below the circumstance that did not adjust in place, the market still exists the space of callback, but this time or won't last long.The adjustment in place after the market mood will be catharsis will return to stability, and even the individual period will have the possibility of a rebound.If the late demand is normal, the price is expected to continue to rebound, and vice versa is still facing repeated shock adjustment, but the overall rise and fall space will not be very large, at least in the "two sessions" before the temporary does not have the conditions for ups and downs.

Ma guanghui expresses, will tell from technical respect, after pulling quickly go up, will appear certainly give back correction, to the periodic adjustment of black fastens, this does not mean to enter downlink cycle at this point.In addition, when the hype factors have been digested and the good news receded and the new wave of hype themes have not appeared, the market enters the "empty window period". At this time, if there is no major negative impact, the market will enter the recovery stage after the adjustment in place, and the current market is in this stage.

In terms of inventory, the national steel social inventory has increased for the eighth week in a row, and the rate of increase accelerated sharply.Lange steel cloud business platform monitoring data shows that as of February 15, 29 key cities nationwide steel social inventory of 14.2602 million tons, compared to the pre-festival increase of 4.4017 million tons, an increase of 44.64%, the rate of increase 29.8 percentage points.

Ma guanghui analyses to point out, this inventory level and in previous years are basic equal, basically be during holiday period steel mill is normal production, and demand is in stasis those who cause, not be the cause of large quantities of active winter is stored.

In the inventory is basically equivalent to the case, the main trend of the downstream demand to see the start of the speed.This year's Spring Festival slightly ahead of the previous year, the Spring Festival before and after the country's large efforts to approve infrastructure projects, will become the late price trend of the leading force.However, the project delay caused by the lack of fund approval that the market worried about in previous years may be significantly alleviated this year.In order to hedge against the downward pressure on the economy, the state has implemented counter-cyclical adjustment this year, and made great efforts.At present, the issuance of local government bonds continues to be hot. Data shows that since the issuance of the first local government bonds on January 21 this year, 95 local government bonds have been issued in about 10 days in January, with a total issuance of 417.966 billion yuan, mostly for major infrastructure projects.So far, this round of local government bond issuance has exceeded the total issuance in the fourth quarter of last year.In addition, the latest data show that CPI and PPI both accelerated downward, the late monetary easing increase or can be expected.

 

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Since the end of the Spring Festival holiday, rebar steel futures prices showed a trend of high fall.The 1905 rebar contract fell 4.13 per cent to rmb3,599 last week.The hot coil 1905 contract fell 3.1 percent to 3,535 yuan per ton.Compared with before the Spring Festival, spot steel rebar rose 60 yuan to 3,840 yuan per ton in Shanghai, 80 yuan to 4,210 yuan per ton in guangzhou and 80 yuan to 3,860 yuan per ton in Beijing.Hot coil spot Shanghai down 20 yuan to 3730 yuan/ton, Beijing up 90 yuan to 3760 yuan/ton, guangzhou up 50 yuan to 3830 yuan/ton.

Demand will remain resilient

After the fifteenth day of the first month of construction demand we mainly from the following aspects.First, housing starts started to rebound in the fourth quarter of last year. As of December 2018, the growth rate of new construction area of the whole real estate has maintained above 15%. Generally, the peak period of steel use is three to six months after housing construction starts.Therefore, this will provide a certain degree of support for steel demand after the Spring Festival.Secondly, demand has been in good condition before the Spring Festival in 2019. Against the background of steel production hitting record highs in succession, there is no obvious accumulation of pre-holiday inventory.Steel demand, however, is likely to continue, with few cliff-edge falls.Finally, this year's environmental restrictions will have little impact on end-demand, making the post-spring festival pace different from that of early 2018.There is a high probability that construction will not be significantly delayed this year.In addition, the effect of the state's policy of supporting infrastructure is gradually emerging.According to the data, investment in infrastructure construction (excluding power) in the first 12 months of 2018 increased by 3.8% year-on-year, 0.1 percentage point higher than that in the first 11 months of 2018.It is reported that in 2019, the planned issuance of new special bonds will reach 2.15 trillion yuan, a significant increase over last year.Meanwhile, the pace of local bond issuance accelerated in January.All this will provide considerable support for the rebound in infrastructure investment.

To sum up, due to the relatively stable demand for steel for real estate and infrastructure, and the construction pace will not be significantly delayed, it is expected that the demand for steel to resume after the Spring Festival this year will still form a certain support for steel prices.

Output falls slightly

In the week of February 14, steel rebar capacity utilization rate of national building materials mills was 66.56 percent, down 0.2 percentage points from last week.In terms of output, in the week of February 14, the national steel rebar output of building materials mills was 2.9212 million tons, down 10,600 tons from last week.

With the decline in steel prices, furnace profits began to decline.According to the profit model, the electric furnace in north China has made a loss, while the electric furnace in east China is close to the break-even line.Profit decline led to lower furnace capacity utilization.In the week ended Feb. 10, capacity utilization at 53 independent electric furnace manufacturers plunged 21.07 percent to 10.92 percent, the data showed.The figure was significantly lower than the same period last year.

Overall, affected by the poor profit, the furnace capacity utilization rate has declined significantly.Rebar capacity utilization declined slightly, but the absolute value of output remains high over the past year.

Rapid inventory growth

Last week rebar inventory showed a more significant increase.According to statistics, the week of February 14, rebar intermediate link inventory of 11.6721 million tons, a rise of 11.1864 million tons.Among them, the social stock of rebar 35 cities was 8.2769 million tons, up by 1.031 million tons compared with the previous period, and the stock of rebar steel mills was 3.3952 million tons, up by 155,400 tons compared with last week.

Although the absolute value of the current inventory is still lower than the same period last year, but the growth rate is fast.This is mainly because production is at an all-time high.Demand for steel has fallen to zero as construction sites shut down during the lunar New Year holiday.Against the backdrop of high production, inventories will naturally accumulate at a faster rate than in the historical period.

Overall, on the supply side, current production expectations remain high, so inventories will continue to accelerate during the demand vacuum.But demand is expected to perform better when work resumes.A rebound in the pace of new construction in the fourth quarter of last year will provide some support for steel demand after the lunar New Year holiday.At the same time, supported by national policies and continuous financial support, the growth rate of infrastructure investment will maintain a month-on-month growth, which will also contribute to the marginal increment of steel demand.Recent rebar by the impact of unclear demand and rapid inventory accumulation from high correction, but is expected to wait until the fifteenth day of the resumption of construction demand gradually released, steel prices will return to rise.Therefore, the short - term should not be too pessimistic.