Stimulated by environmental protection and production restrictions in late June, steel prices experienced a strong rally (only July 1, the national average price of screw thread rose 89 yuan / ton), but then entered the bottom period due to the lack of basic support, and consolidation so far (from July 2 to now, the national average price of thread has been maintained at 40-4080 yuan / ton narrow range fluctuation). This is mainly due to, on the one hand, high production. On the one hand, the profits of steel mills are rapidly compressed under the strong performance of cost-side (iron ore, coke), so the enthusiasm for producing the most profitable screw thread in Pugang has always been high. In July, the planned output of the mainstream steel mills in East China, especially in East China, continued to increase, which hedged the supply reduction caused by environmental protection and production restriction in Hebei. On the demand side, precipitation and high temperatures followed in July, and rigid demand for building materials across the country was not released smoothly by seasonal interference. Under the accumulation of the contradiction between supply and demand, inventory is the first to respond-according to SMM, thread inventory increased by 30.8 per cent as of July 19 compared with the same period last year. So, under the pressure of many parties, what about the local market sentiment? According to SMM research, the current market sentiment is still mainly wait-and-see, on the one hand, under the pressure of high inventory, high output. In the steel price nearly a month "do not go up or down" under the rub, the mentality has been very fragile, so today's futures market in the interference of funds weakened, businesses immediately reduced prices to ship. On the other hand, there are vague expectations for the only way to curb the high supply situation to continue to maintain-production restrictions. According to SMM research, the current business feedback generally do not dare to keep too high inventory, but also do not dare to sell goods at a low price, keep rolling operation.
[deal today]
Beijing market: today's spot price fell 30 to 40 yuan / ton, in the morning Hegang fell 20 to 30 yuan / ton quotation 3890 to 3910 yuan / ton, the transaction was not good, in the afternoon to continue to reduce 10 quotations by 3880 yuan / ton. Due to the strict implementation of environmental protection and production restrictions in North China, the reduction of thread supply is more obvious, the local inventory pressure is also relatively small, the overall market mentality is still relatively peaceful.
Shanghai market: today's spot price fell 30 to 40 yuan / ton, Shagang quoted price of 3930 yuan / ton. The deal is bad. The local wait-and-see mood is relatively strong, short-term spot prices do not hold expectations, but pay close attention to the production restrictions related news, that the future spot prices are difficult to fluctuate significantly.
Hangzhou market: today's thread price dropped 40 to 50 yuan / ton, in the morning Shagang resources quoted price of 4000 yuan / ton, in the afternoon with the futures market down 10 yuan / ton, Shagang quoted price of 3990 yuan / ton. Hangzhou, as the city with the greatest inventory pressure (according to SMM statistics, Hangzhou inventory as of July 19, year-on-year + 83.4%), led the national market. Mainly in the early stage of the current insurance operation locked spot resources, recently due to the expansion of the current base difference and began to enter the market, but local business feedback has long been expected, the current state of mind has not been affected by this, is still more wait-and-see, waiting for a new round of production restrictions to come out.
Guangzhou market: today, cold steel resources fell 20 yuan / ton quoted price of 4140 yuan / ton, shipment is true, the market has a hidden drop in the situation of shipment.
It is worth noting that at present, some parts of the southwest are panicking as a result of the sharp fall in steel prices today. However, on the supply side, after today's drop in spot prices, the national electric arc furnace steel mills may fully enter a state of loss, coupled with the expected production restriction policy, supply may fall back or already on the way, follow-up demand is also expected to be well released in the event of reduced seasonal interference, and the market does not have to be too tight.
