In April, the domestic rebar market price presents the operation situation of "adjusting first and then rebounding at the end of March and the beginning of April", which is basically in line with the expectation, so what is the rebar market in May? What hot spots do you need to pay attention to? Liang Taigeng, general manager of Shanghai Hualei Enterprise Development Co., Ltd., forecasts and analyzes this, and thinks that the trend of rebar market in May is price fluctuation adjustment and regional differentiation.
According to the feedback from the sales and the firsthand situation of the construction steel market, such as the rebar in April, the trend of the rebar market in April was basically in line with expectations, that is, at the end of March and the beginning of April. After entering the short-term adjustment, the price gradually rebounded, and there was a rebound in the rebar market price in East China, up about 300 yuan per ton. In May, the price fluctuation of the rebar market was adjusted, and the price differentiation appeared everywhere. At the same time, several uncertain factors affecting the market trend need to be paid more attention to.
Then, Liang Taigeng analyzes and expounds the changes of the market price trend of rebar in May from the two aspects of supply and demand.
Liang Taigeng believes that at present, the profit situation of steel enterprises is good, the utilization rate of production capacity is very high, and almost all long-process iron and steel enterprises, in addition to routine maintenance, are operating at full capacity, resulting in an increase in production. According to the National Bureau of Statistics, in March 2019, China's steel bar production was 19.114 million tons, an increase of 14.8 percent over the same period last year. The cumulative output from January to March was 52.99 million tons, an increase of 12.8 percent over the same period last year. The latest data from the China Iron and Steel Association show that the average daily output of crude steel in the country's key iron and steel enterprises in early April was 1.955 million tons, an increase of 6.56 percent over the previous ten days. At the end of early April, the steel inventory of key iron and steel enterprises was 12.3462 million tons, an increase of 6.2 per cent over the end of the previous decade. At present, the output of rebar has reached an all-time high. Statistics show that in the second week of April, our steel statistical caliber domestic screw steel weekly output is 3.5 million tons, and in the third week of April, the weekly output of the same caliber is 3.55 million tons, which has exceeded last year's peak. There is still an increasing trend. If environmental protection is not taken into account, the rebar market supply in May is expected to increase from April.
Another factor affecting the supply of rebar in May is the change in the export situation. In March, China's steel exports increased. According to the latest data from the General Administration of Customs, China exported a total of 17.02 million tons of steel from January to March 2019, an increase of 12.3 per cent over the same period last year. The export volume of rebar also increased obviously, showing an increasing trend compared with the previous month. However, due to the fact that the price of rebar in the domestic market is generally higher than that in the international market, and manufacturers are not willing to export from the point of view of efficiency, then the export volume of rebar in May is expected to decrease, thus increasing the volume of investment in the domestic market. Affect the market supply of rebar in May.
In addition, the difference between the price of industrial round bar and the price of rebar also affects the supply of rebar to a certain extent. Due to the recent strong rebound in the market price of rebar, which has gone up all the way, the price of rebar is basically close to that of industrial round bar. In some areas, the price of rebar is even higher than that of industrial round bar. As a result, some steel mills tilt their production capacity to rebar and increase the output of rebar. In addition, at present, the profit per ton of EAF steel is also about 300 yuan, EAF steel enterprises try their best to produce high yield.
From these factors, the rebar market supply in May is expected to increase further from April, affecting the price trend.
Liang Taigeng believes that the actual demand of the rebar market in April slightly exceeded expectations. Judging from the current developments, the market demand in May may be slightly lower than that in April, mainly due to several reasons:
First, seasonal weather factors. In the middle and late May, the southern region gradually entered the Meiyu period, the construction project affected by the rainy season, the construction progress slowed down, the demand for rebar will decline.
Second, the real estate industry. On the whole, the demand for rebar steel in real estate still has great toughness. From January to March this year, investment in real estate development nationwide was 2.3803 trillion yuan, an increase of 11.8 percent over the same period last year, an increase of 0.2 percentage points over the period from January to February, and the area of new housing construction was 387.28 million square meters, an increase of 11.9 percent. The growth rate increased by 5.9 percentage points. Sales of commercial housing totaled 2.7039 trillion yuan, an increase of 5.6 percent, or an increase of 2.8 percent. Central Plains Real Estate Research Center statistics, before the national deadline, 21 housing enterprises have taken more than 10 billion land this year. Among them, the number of financial places has been close to 80, the total amount as high as 56.5 billion, ranking first. From this point of view, the scale of real estate under construction is still high, and the demand for rebar in the real estate industry in May is basically the same as that in April, which is relatively stable.
Third, the demand for rebar steel in the infrastructure industry has further increased. At present, all localities are stepping up efforts to make up for the shortcomings and weaknesses of infrastructure construction, and infrastructure investment is showing a trend of growth. From January to March this year, domestic infrastructure investment rose 4.4% from a year earlier, 0.1 percentage points higher than in January-February. In March and April, major local infrastructure projects began in an intensive manner. According to incomplete statistics, in the first quarter alone, nearly 20 provinces focused on more than 10,000 key projects, with a total investment of nearly 5 trillion yuan. For example, Shanghai will arrange 138 major projects and 28 preparatory projects in 2019 to promote the implementation of the national strategy for the integrated development of the Yangtze River Delta. Beijing will also promote 100 infrastructure projects, with a planned investment of about 53.8 billion yuan in that year. Guizhou, Sichuan and other places have also launched key projects. Among them, Sichuan Province started more than 1900 projects in March, with an investment of trillions of dollars. There is no doubt that infrastructure ushered in a "blowout period", which will lead to a huge amount of steel demand, especially the strength of the demand for construction steel such as rebar.
Liang Taigeng believes that from the impact of the rainy season on the reduction of demand for building materials, but the real estate industry has resilience to demand and the increment of infrastructure demand, and so on. It is predicted that the rebar market demand in May will be basically stable or slightly lower than that in April.
Then, Liang Taigeng analyzes the impact of regional differences in rebar market prices in May on the market. Nowadays, the prices of rebar produced by northern steel mills in North China, East China and South China are basically close to each other. Because there is not much regional price difference, the circulation of resources between regions is weakened. As a result, the pressure of supply and demand in the resource export area is increased, and the thread steel market in the resource input area is tight. In this way, due to the different supply and demand of rebar market resources in May, it will eventually lead to the differentiation of price fluctuations.
Finally, Liang Taigeng talked about several uncertain factors that need to be focused on affecting the rebar market in May.
First, focus on the implementation of environmental protection production restrictions on the impact of the rebar market. Looking back on environmental protection, the second round of environmental protection monitoring and the change of production restriction measures and policies in the non-heating season will have an impact on the capacity release of iron and steel enterprises in some areas, thus affecting the supply of rebar market in May. Recently, Hebei, Shandong, Shanxi and other areas have introduced non-heating season environmental protection measures to limit production. For example, a few days ago, Handan City Air quality Assurance Emergency Command Center issued a notice to start the heavily polluted weather class II emergency response. Iron and steel, coking and other key industries in accordance with the "Handan 2019 key industries in the second quarter of air pollution prevention and control plan" to implement differentiated control. The production capacity of sintering machine and the number of units in iron and steel enterprises, and the shutdown proportion of shaft furnace and ash kiln are all more than 50% (single sintering machine stops production). Tangshan area has also issued the implementation plan of non-warm season stage-by-stage production restriction measures. All these will affect the capacity release of some steel enterprises, thus affecting the supply of construction steel market such as threaded steel in the later stage. The actual situation of production restriction needs to be closely followed up.
The second is to focus on the impact of weather changes on the market demand of rebar. In the middle and late May, the southern region of China gradually entered the Meiyu season from south to north, and the rainfall is expected to be heavy this year, which slows down the construction of construction projects due to the rainy season, especially the pit foundation of new real estate projects and infrastructure projects. This will certainly affect the demand for rebar. Therefore, the weather factor is an important factor for the change of rebar demand in May, which should be paid attention to by traders.
Third, focus on the changes in the financial situation, the impact on the rebar market in May. Recently, some central meetings have frequently mentioned "monetary policy." The meeting of the political Bureau of the CPC Central Committee held on 19 April put forward that a prudent monetary policy should be loose and tight. On the 22nd, the fourth meeting of the Central Financial and Economic Committee also pointed out that monetary policy should be relaxed and moderately tight, and be adjusted and fine-tuned in a timely manner in the light of changes in economic growth and price situation. This is a signal that national policy makers are setting the next stage of monetary policy. The fine-tuning of monetary policy is directly related to the changes in the availability of funds for real estate and infrastructure projects, which will affect the rhythm of demand, thus affecting the trend of the rebar market in May.
Fourth, focus on the impact of changes in the capital market on the trend of the entire steel market, including rebar. In the past two years, the linkage between the futures market and the spot market of steel is increasing. In late April, due to the higher-than-expected intensity of actual demand, spot prices fell relative to futures, and recently the link between the futures market and the spot market was weak, resulting in small fluctuations in the price of short-term rebar market, which is expected to be in May. The linkage of the futures market will be further enhanced, which will have a certain impact on the price changes of the whole steel spot market, including rebar.