I. market review
Since July, the main contract of rebar rebar 1910 showed a shock downward, as of August 5, the main phase snail from the highest point of 4148 points to the lowest point of 3724 points, a decline of nearly 10.2%.This round of decline mainly due to loose supply and policy production limit expected poor, steel mills in the profit driven by short process to add scrap steel production, resulting in increased pressure on supply.From the end of June in hebei tangshan and wuan limit production schemes, on July 20, tangshan scheme of atmospheric pollution prevention and control measures, the market for stricter environmental protection high expectations, and published on July 28, tangshan iron and steel enterprises to leak less than expected, according to mysteel, if according to this scheme, the influence of iron water about 76500 tons/day in August, from July to leak measure to decrease of about 90000 tons/day;The demand end is in a seasonal low season, and the continuous high temperature in July affects the construction of downstream sites. The superimposed policies adhere to the concept of "no speculation in housing", and the tightening of real estate trust and debt financing leads to a pessimistic expectation of future market demand.The inventory end continues to accumulate, and the social steel inventory has increased for 8 consecutive weeks, which continues to pressure the snail market.
1. Real estate financing is tightened, and the index shows a resistance decline
The downstream demand of steel includes real estate, infrastructure, machinery, automobiles, home appliances, etc. In 2018, steel accounted for 52% of the total real estate and infrastructure consumption.To June 2019 in real estate development investment grew 10.9%, compared with the previous value fell by 0.2%, year-on-year growth of 4.1% over the infrastructure investment rose 0.1% from the previous value, July 30, the politburo meeting to continue adhering to the room for not fry, multi-channel curb real estate financing, real estate will remain under pressure, and the current risk challenges at home and abroad, the economic downward pressure, infrastructure investment will gradually appear in the inverse cycle regulation.
Real estate trust and overseas bond financing have been tightened due to the impact of policies, and various indicators have gradually weakened.June 1 - the national commercial housing sales area of 758 million square meters, fell 1.8% year on year, a drop more than 1 - expanded by 0.2% in May, June 1 - the new housing construction area of 1.055 billion square meters, accumulative total rose 10.10%, down 0.4%, housing construction area of 7.72 billion square meters, the cumulative year-on-year growth was flat last month, the building area of 32400 square meters, the completion of fell 12.7% year on year, may expand at a 1-0.3%, June 1 - the national land area of 80.35 million square meters, purchase fell 27.5% year on year,The decline was 5.7 percentage points narrower than the january-may period.It is expected that in the medium and long term, under the circumstance of tightening financing environment and weakening sales, real estate enterprises are not expected to acquire land, and the heat of the land market will continue to be restrained. However, short-term real estate enterprises will still accelerate the sales revenue collection through "rush to start construction" and "high turnover" mode to some extent, and the real estate industry may maintain the resistance to decline.
2. The politburo increases consumption measures, and the marginal warming of automobiles and household appliances is expected
In June 2019, the production of excavators was 21,378 units, with a year-on-year growth rate of 12% and an 8% decrease from the previous value. From January to June, the cumulative production of excavators was 159,884 units, with an accumulative year-on-year growth rate of 19.1%, and a 6.1% decrease from the previous value.In June 2019, the output of automobiles was 1.96 million, with the year-on-year growth rate decreasing by 15.2% and 6.3 percentage points lower than the previous value. From January to June, the cumulative output of automobiles was 12.14 million, with the cumulative year-on-year growth rate of 14.2%, 0.1 percentage point lower than the previous value.From January to June, the cumulative output of civilian steel ships reached 16.259 million deadweight tons, with a year-on-year growth rate of 12.2%, 5.6 percentage points higher than the previous value.In June 2019, a total of 35.294 million units of household refrigerators, air conditioners and washing machines were produced, down 3.3 percent month-on-month and up 5.9 percent year-on-year.
The politburo meeting revealed measures to boost consumption of cars and home appliances.After the transformation from the fifth to the sixth year of China, dealers have increased their efforts to reduce stock, promoting the temporary recovery of automobile market demand in June, but it will also overdraw future automobile consumption. According to the automobile association, the retail sales growth rate of 1-4 weeks in July is -16%, which is significantly lower than the growth rate of 5% in 1-4 weeks in June.Household appliances belong to the post-cycle industry of real estate. Under the gradual decline of the resistance of real estate in the future, household appliances will move forward with heavy burdens. If household appliances consumption is stimulated, or the household appliances industry gradually recovers.
3.The supply side
1. Production continues to increase, and profits of steel mills decline
Steel production increased, steel profits fell.From January to June 2019, China produced 404 million tons of pig iron, 492 million tons of crude steel and 587 million tons of steel, up 7.9 percent, 9.9 percent and 11.4 percent year-on-year, respectively.Despite the substantial growth of steel production, the benefits of steel enterprises have declined significantly. According to cisa, the total profit of steel enterprises in the first half of the year was 106.5 billion yuan, down 20.5% year-on-year, among which the profit of main business was down 30.7% year-on-year.Sales profit margin 5.1%, down 2 percentage points year-on-year, lower than the national scale of industrial enterprises above the average profit margin.
Steel corporate profits fell sharply, on the one hand, due to the raw material of high end prices prompted steelmaking cost uplift, erosion of timber sales gross profit margin, due to iron ore mine and sharply reduce the number of vale, the natural disasters led to price increase, on the other hand, environmental protection to leak less than expected, steel mills by short process adding scrap steel supply pressure continued to rise.
2. Scrap prices continue to rise, hebei steel production limits weakened environmental protection
Scrap prices and rebar prices from fear of sustained deviation.Since July scrap steel prices continue to rise, with the rebar prices appear, look from scrap steel supply and demand fundamentals, July output to reduce the scrap steel resources, due to high temperature processing and receiving difficult, market circulation of resources, less steel because of the high iron ore prices, the long process of steelmaking costs rise, some steel mills intensify short flow steelmaking, prompting arc furnace capacity and capacity utilization in high, but as scrap steel prices higher, short flow steelmaking costs rise, and rebar prices are lower, steel mills in the profit distribution into consideration, tolerance of scrap rising or limited, or gradually reduce the purchase of steel scrap,Scrap prices continue to rise more difficult, according to mysteel, as of August 1, 53 independent arc furnace operating rate decreased to 75.77%, capacity utilization rate rose to 66.24%.
Hebei steel mill environmental protection limit intensity weakened, steel production continues to increase.In June 2019, the national steel production is 107 million tons, including hebei steel output of 25.8595 million tons, accounting for 24% of national output, from steel production in hebei province since march this year than last year's monthly high, steel supply pressure, the recent steel mill in hebei province policy environmental protection less than expected, tangshan and wuan environmental limit production control plan, released August compared to July policy, tangshan region obvious relaxation limit production policy, according to mysteel, tangshan limit production plan, in August the influence of iron water about 76500 tons/day, from July to leak measure to decrease of about 90000 tons/day;As of August 2, the blast furnace operating rate of tangshan steel mill was 61.59%, rising for three consecutive weeks. Generally speaking, the policy production limit of hebei steel mill was gradually weakened, and steel output is expected to continue to increase.
3. The cost of tons of steel rises, and the profit is adjusted to black as the balance center
Become material profit receives the rod environmental protection theme to become the adjustment black system core driving force.From the calculation formula of ton steel cost, the ton steel cost of rebar =[(1.6* iron ore +0.45* coke) /0.9*0.96+0.15* scrap]/0.82, it can be seen that in the cost of rebar, the front coefficient of iron ore is the largest, followed by coke, followed by scrap.
Rebar sales prices are lower, while the cost of per ton steel is on the rise, the gross margin decline rebar, steel mills to maintain profit has the following several paths, one is steel through reduce capacity, in order to boost sales price, the long process of steelmaking is the mainstream of steel steelmaking, and the short flow steelmaking is elastic, generally higher than that of blast furnace steelmaking eaf steelmaking cost, while steel prices fell to eaf steelmaking cost line, short flow steelmaking will take the lead in production;Second, steel mills reduce the cost of tons of steel by suppressing the price of raw materials. Recently, the price of iron ore is high, the first round of coke price increase basically falls to the ground, and the scrap price continues to rise. Steel mills, in the context of maintaining the production of rigid demand, do not purchase more raw materials, leading the market to pessimistic expectations of raw material demand;Third, steel mills increase research and development to improve blast furnace steelmaking technology, reduce the cost of steelmaking, which is also the current national initiative to increase research and development force, into high-end manufacturing policy guidance.To sum up, steel mill sales gross profit will be adjusted the entire black system profit distribution key point.
Seasonal consumption slack season, steel social inventory continued to accumulate.Around July in high temperature and rainy, site construction progress slows, steel consumption continuously is restrained, lead to social steel inventories continue to accumulate, as of August 2, 12.8453 million tons of steel social inventory, increase for 8 weeks, from steel inventory weekly data graph, found that the current inventory data is located in the same period of the highest level since 2015, in August, steel mills weakened efforts to limit production of environmental protection, supply pressure continues to increase, the downstream demand tightening present resistance type slow down, because the real estate financing market it on before the National Day is expected to limit production of environmental protection to strengthen the expected beijing-tianjin-hebei region,But in the steel supply strong demand weak background, steel trend is difficult to say optimistic.
Steel rebar fundamentals maintain strong demand for weak, supply end, hebei steel mill environmental protection production limit intensity is weakened, steel production is expected to continue to increase, ton steel manufacturing costs rise, material profits continue to shrink, fall space is limited, material profit or connect to the environmental protection theme into black series adjustment hub;Demand side, downstream real estate in the background of financing tightening, demand side is expected to resist the fall.