[SMM Black issue Daily Review] idle fishing on Bixi, like Iyin dreaming of him passing by the sun by boat!

Current Daily Review (April 29)

< 1 > spot aspect.

Today, the overall stability of steel market prices tend to rise, some steel enterprises capricious pull upside down serious and weather factors affect regional differences. As far as the transaction is concerned, there is no exception. Tangshan area billet yesterday rebound 20 yuan, now stable to 3560 yuan / ton. Market mentality: caution dominates.

< second > steel aspect. The stock market is green and the goods are light green; black is pink as a whole.

RB1910 main contract:

Within-day sharp increase and decrease positions, tail reduction positions to 19880 hands, within the day between 3735 and 3779 concussion rebound, the end of 3777. The main organization has a net increase of 6521 hands per day.

HC1910 main contract:

During the day, there was a sharp increase and decrease in positions and tail positions to 7730 hands, with a strong rebound between 619 and 634 during the day and a close of 634 at the end of the day. The main organization has a net increase of 12484 hands per day.

Demon Jiao J1909 main contract:

Within the day significantly reduced positions, tail reduced positions to 32374 hands, within the day between 2008 and 2049 concussion upward, the end of 2047. The main organization has a net increase of 4120 hands per day.

Coking coal JM1909 main contract:

During the day, a small reduction of positions, tail reduction to 10362 hands, within the day between 1346 and 1362 between a narrow range of strong shocks, the end of 1354.5. The main organization has a net extra 270 hands per day.

Forecast for tomorrow.

1. Spot aspect: small concussion upward continuation.

2. Futures:

RB1910 main contract: between 3730 and 3820 concussion.

HC1910 main contract: between 3650 and 3760 concussion.

Iron ore l1909 main contract: 620 to 645 concussion.

Demon Jiao J1909 main contract: 2010 to 2070 concussion.

Coking coal JM1909 main contract: 1330 to 1370 concussion.

The recommendation for the current operation for the < four > period remains unchanged. See the weekly review for details.

Friendship reminds, futures light position festival.

< five > Information and Heart language.

1. Iron ore: the Yankees stopped exempting Iran's crude oil exporters in May, boosting a strong rebound in mines. The author is still optimistic that the main logic of iron ore prices in May and June includes, and is not limited to, supply-side substantial convergence, high demand toughness, the dollar index, large disturbances in crude oil, and scrap cavitation movements. It is still suggested that Buduo should be low, but not high; as for patriotism and technology, the wall-riding school is empty. Different people see benevolence, and wise people see wisdom.

2. Coke spot prices rose and fell to the ground in the first round. The author N times analysis, spot price malaise is difficult to continue.

3.RB1910 contract, short-paced dish washing probability is large, more and more empty and easy point, do not save high, falling bag is a hard road. The trend range is also small, with a high probability of fluctuating in the range of 3560 to 4010. A lot of empty food is tasteless.

4. If steel prices in May, quickly adjusted in place (300 ±30), the current round of decline seems to be completed (time dimension failure), dare to copy the bottom again; the same is true of steel. Don't worry about gains and losses!

5. The author short rhythm forecast, the pre-festival replenishment demand is easy to rise and fall as expected.

< VI > with trend analysis and views.

Prospect of Steel Market

(second quarter May / June)

Steel prices from the low price scattered back to come back, the process can be described as thorns, the final fruit of the three armed forces after the face! The main logic includes, and is not limited to, better-than-expected macroeconomic data, a deep kiss on the weakness of infrastructure, a three-month growth rate in the new opening area of real estate in December 2018, the late return of cost-driven arc furnace production and the removal of inventory. In short, the author's forward-looking trend forecast: direction (rebound), amplitude (500 ±50), short-rhythm review and period steel RB1905 contract (3900 ±100) all arrived as scheduled, except for the time dimension of 75 days to be verified. Those who practice the author's point of view, see teeth all over their faces, and finally sleep in the west. April is about to become a memory, the second quarter of the remaining 5, June steel market how to interpret it? The author may wish to analyze and verify this problem.

2. Macroeconomic analysis.

The author expects: based on Q1 macroeconomic data is OK, policy stimulus into the observation window, forward and backward depends on Q2 macroeconomic data sunrise. Liquidity maintenance is a high probability event. As for the market worries about tighter liquidity, do not agree, do not worry about the ancients. Still maintain the original judgment on the macro-economy: the revolution has not yet succeeded, comrades still have to work hard!

3. Deductive verification of the relationship between supply and demand.

On the supply side: driven by high profits, supply side expansion is a high probability event. Although the process of local steel enterprises (Class A) will be disturbed by environmental protection and production restrictions, the general trend is difficult to move. Arc furnace capacity release is on the road (including, but not limited to, recent falls in scrap prices, profits of about 300, high operating rates, high production utilization, and inventory data).

Demand-side:

Infrastructure to make up for the shortcomings of the board on the road, there is no doubt, and the intensity is positively related to the time dimension.

Property demand, with the 11.9 per cent growth rate of new construction released in March, shows that resilience remains, but convergence is more deterministic than in December 2018. That is to say, it is difficult to maintain the current high demand. The positive correlation between demand convergence and time dimension is a high probability event.

4. How much do you know about the dimension of time and space?

Time dimension, down time dimension 45 days;

In the spatial dimension, it fell 300 ±30 yuan per ton.

5. The rationality of the operation range of steel price is verified from the angle of blast furnace cost.

Iron ore: the recent patriotic feelings are constantly disturbed, understanding does not comment. The author tends to think that the high iron ore price in May and June is a big probability, the review space is limited (including but not limited to global demand, domestic demand expansion, supply-side substantial convergence, the dollar index back to 98, i1909 contract depth discount; As for the expansion of domestic mineral energy is only a drop in the ocean and is subject to environmental and safety policies).

Coke: despite the technical progress of coke enterprises, shorten the coking time, but the current spot price is difficult to sustain, some coke enterprises spot price rise and start again. The author predicts that the rebound space is 200 to 400 yuan per ton.

In short, it may be useful to calculate by the following value. At present, the cost of RB is about 3250 yuan / ton, that is to say, the cost of Q2 and Q3 is moved up to 3350 yuan / ton. the author predicts that the profit of blast furnace can still maintain 300 yuan / ton in the third quarter, so the spot adjustment price is 3800 yuan / ton and the period steel is 3650, which should be a value depression.

6. How much do you know about the downlink amplitude of the short process electric arc furnace from the cost angle?

First of all, scrap price verification?

It is suggested that the annual capacity of blast furnace and electric arc furnace should be 830 million tons and 130 million tons respectively. the waste ratio of blast furnace is 30% and the average recovery rate of scrap is 93.5%. The apparent annual demand for scrap passes through 400 million tons, how much do you have to worry about it?

Secondly, the current static cost is about 3850 yuan / ton, the downlink range covers the profits of the electric arc furnace and takes into account inertia to force the supply side to shrink.

Therefore, from the electric arc furnace cost point of view, the spot price 3700 to 3750 strong support and sustainability is difficult to sustain!

7. Relationship between static inventory and equivalent Steel Price how much do you know about the downside risk of steel price at present?

This week RB total inventory of 8.55 million tons, the corresponding average price of 4170 yuan / ton, the same period last year RB total inventory of 9.03 million tons, the corresponding average price of 4050 yuan / ton. In absolute terms, it is as high as 120 yuan / ton (not taking into account the fact that the inventory is not as good as the same period last year), only the mine disaster factor has been moved up to 350 yuan / ton and the tax point has been removed and revised downward by 100 yuan / ton, that is, the current equivalent steel price is 3720 yuan / ton. Compared with the same period last year, the price advantage is obvious.

8.。 I know you on the steel side.

RB1910 contract, since "Pangu", the so-called technology gap has not been filled is a small probability event, the normal rutting position of 3560 yuan / ton, converted to spot price of 3700. The current adjustment range is related to each other.

9. The disturbance of environmental protection and production restriction policy is still used to the whole year.

In summary, an overview of the analysis and a trend view are given:

In May, it showed a high before and then a low, resistant shock down; in June, it continued to decline. Spatial dimension: 300 ±30. Time dimension: 45 days. Steel target position 3560. It's all a big probability!

Warm hint, May 17 real estate new construction area growth rate sunrise on the period of large disturbance is a large probability event!

Attached: a brief analysis of the factors affecting the operation situation of steel prices in the second half of the year.

1. Domestic macroeconomic downward pressure remains.

2. Probability of large expansion of supply side storage.

3. Demand resilience is not poor.

4. As a result of the Sino-US trade negotiations, the decline in exports is difficult to reverse.

5. The raw material end includes double coke, scrap, iron ore price is easy to rise but not fall.

6. The sharp convergence of steel mill profits is a high probability event, and the short-term loss of the whole industry but unsustainable is also a high probability.

7. Industrial cycle (four-year cycle), cow-bear conversion is a high probability event.

Therefore, the profit of short steel plants in the second half of the year should be a good option, but the absolute value of steel prices should not be overly undervalued.

Details consultant Mr Luk Ching-ping 021 51595781

(disclaimer: this article is made and distributed exclusively by SMM Iron and Steel under the exclusive authorization of the author and may not be reproduced without authorization.)