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The spot price of hot coil rose strongly, and the terminal demand was released steadily.

iconApr 4, 2019 19:51
Source:SMM

This week's tax reform policy landed, hot spot prices did not fall but rose, market transactions from strong to weak.

However, at present, the price has risen to the high level after the year, the terminal acceptance of the high price is weak, although the price is stable, but the business has the phenomenon of dark decline, the transaction is weak and weak. At the same time, as the northern region enters the non-heating season, the production restrictions of long-process steel mills have been loosened one after another, and the output of hot rolls has increased significantly this week, increasing the market's concern about the increase in supply. In addition, the latest dealer inventory early warning index survey released by the China Automobile Circulation Association shows that the auto dealer inventory early warning index in March was 55.3%, down 8.3% from the previous month and up 3.2% from the same period last year. The operation of the warning line for 15 consecutive months has led to a lack of confidence in the momentum of demand in the later period, so spot prices are expected to be under pressure, but the space is limited. Mainly due to the limited supply increment space in April, the feedback from steel mills in the recovery area, the blast furnace output can not be recovered immediately after the resumption of production, and the pre-outstanding orders have not yet been settled, so the inflow of market resources is limited. In addition, under the influence of the arrival cycle of incremental resources, the short-term impact on the market is limited. Demand-side expectations are weak, but the national rescue policy has been issued one after another, the market should not be overly pessimistic, at the same time, April is still in the peak season, terminal procurement is still continuous. As a result, prices as a whole still maintain the pattern of high volatility.

[review this week]:

Spot: the national average price of hot volumes this week is 3885.65, which is up 44.65 this week compared with last week due to the rising futures market and the outbreak of demand for replenishment.

Futures: the volume of the current cycle rose strongly, and the settlement price of 1905 of the volume as of Thursday was up 118% from 3707 on Friday.

1. Supply side: hot coil steel mill resumed production, weekly output increased.

Next week, market shipments will continue to recover and steel mill production will continue to rise. However, the ex-factory prices of steel mills are generally rising, and traders are mostly replenished by the spot market, so traders do not place orders from steel mills at present.

2. Demand side: purchasing sentiment picks up and demand releases steadily

This week, the overall purchasing sentiment has picked up, the market replenishment sentiment is relatively high, and with the introduction of the national rescue policy, the terminal demand will be released steadily.

On April 1, the National Bureau of Statistics of the machinery industry announced that the PMI index of China's manufacturing industry was 50.5 in March, returning to above the line of prosperity and decline. At the same time, with the steady growth of investment in infrastructure construction in various provinces and cities, the demand for machinery industry, especially road construction machinery, will rise.

Auto industry sales have fallen this week. According to data released by the China Automobile Circulation Association, in March 2019, the auto dealer inventory warning index was 55.3 percent, down 8.3 percentage points from the previous month. It rose 3.2 percentage points from a year earlier, with the inventory warning index above the warning line. In April, the VAT tax rate reduction policy was officially implemented, and some wait-and-see demand will be released, helping to boost car sales. But in April, there was Ching Ming Festival, and consumers in parts of the south were not influenced by traditional customs to buy cars in April, which will also affect sales in April.

Home appliance industry commercial housing sales pick up, kitchen and electricity industry is expected to pick up. The retail volume of kitchen and electricity is highly related to the change of commercial housing sales, which generally lags behind the change of commercial housing sales area by 2 to 3 quarters. In March 2019, the transaction area of commercial housing in 30 large and medium-sized cities increased by 17.4% compared with the same period last year (the previous value was 8.3%). Among them, transactions in first-tier cities increased by 53.0% compared with the same period last year (previous value was 44.6%), transactions in second-tier cities increased by 3.7% (previous value was-6.1%), and transactions in third-tier cities increased by 21.0% year-on-year (previous value was 19.5%). Commercial housing sales have picked up, the kitchen and electricity industry is expected to pick up.

The construction industry takes into account that China's steel structure assembly building accounts for less than 5% of the total building area, compared with the main developed countries account for 30% to 50% of the gap is obvious, China's steel structure assembly construction industry has a huge growth space. On March 27, the official website of the Ministry of Housing and Construction issued the Circular on the issuance of the main points of work of the Construction Market Supervision Department of the Ministry of Housing and Urban and Rural Development in 2019, which proposed to promote the reform of key areas of the construction industry and promote the transformation and upgrading of the construction industry. Among them, it is emphasized that the steel structure should be promoted in the housing construction pilot project, and the steel structure industry may usher in a period of opportunity for development.

Gao Feng, spokesman for the Ministry of Commerce of the transportation industry, said at a regular news conference on the 4th that It will promote the growth of automobile consumption by optimizing the market environment, expanding the supply channel, promoting the upgrading of consumption structure, promoting the development of automobile rear market and so on. Gaofeng said that it will further promote parallel imports of cars, completely abolish the policy of restricting relocation of used cars, and promote the development of the post-car market, such as car races, car tourism, car modification, and so on. Considering that China's steel structure assembly building accounts for less than 5% of the total building area, compared with the main developed countries account for 30% to 50% of the gap is obvious, China's steel structure assembly construction industry has a huge growth space. On March 27, the official website of the Ministry of Housing and Construction issued the Circular on the issuance of the main points of work of the Construction Market Supervision Department of the Ministry of Housing and Urban and Rural Development in 2019, which proposed to promote the reform of key areas of the construction industry and promote the transformation and upgrading of the construction industry. Among them, it is emphasized that the steel structure should be promoted in the housing construction pilot project, and the steel structure industry may usher in a period of opportunity for development.

[inventory]

On the treasury side: the country's total inventory is currently 3.277 million tons, down 3.1% from last week and 5.2% from the same period last year (7 weeks after the Lunar New year festival).

[macro and policy aspects]

1. Li Keqiang: the larger tax cuts we have promised must be fulfilled.

Chinese Premier Li Keqiang said in a speech at the Boao Forum for Asia on the 28th that we must implement the measures promised to reduce taxes and fees on a larger scale. Tax reduction and fee reduction is a fair, inclusive, direct and effective reform measure, and it is an important measure to stimulate the vitality of the main body of the market and deal with the downward pressure of the economy this year. Tax cuts and social security contributions this year will reduce the burden on enterprises by nearly 2 trillion yuan. This is a great boon for businesses, but a great pressure on the government. We demand that governments at all levels themselves live a tight life, reduce general expenditure, invigorate the stock of assets and funds, and increase income and reduce expenditure mainly to support tax cuts and fees, in exchange for the improvement of enterprise efficiency and the enhancement of market vitality. We will find a new way to open up sources of revenue and save money and benefit the enterprises and the people.

2. The RMB exchange rate is expected to take the "middle route"

The Federal Reserve pressed the "suspension button" to raise interest rates last week, and a new round of strong RMB cycle officially began. Analysts believe that this year, the operating environment of the RMB exchange rate is facing "one improvement" and "one positive," and the pressure on devaluation has been significantly alleviated, but the current international political and economic situation is complicated and the foreign exchange market is relatively uncertain. The trend of the US dollar is still unclear, the momentum of RMB exchange rate appreciation is insufficient, and there is little possibility of unilateral appreciation or depreciation this year.

3. The profits of iron and steel enterprises will gradually return to the rational range this year.

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