[brief comment on SMM Hot Volume] Tangshan Environmental Protection and production restriction is difficult to reflect in the short term on the supply side.

According to SMM steel mill research feedback: in response to the "win the blue sky defense war 2019 implementation plan" policy, Fengnan District, Fengrun District and other areas of a number of steel mills have been asked to stop blast furnace production, production restrictions and so on. Among them,

A billet adjustment plant (Kaiping District): at present, Kaiping District billet adjustment plant is basically shut down. Benxi Iron and Steel Plant No. 9 stopped production, affecting the average daily output of 0.24-2700 tons. At present, the time for the resumption of production has not yet been set, waiting for the policy notice.

B blast furnace plant (Luanxian): at present, the production of blast furnace (1080 cubic meters) is suspended, which is expected to stop from August to September, affecting the average daily output of about 10, 000 tons.

C blast furnace plant (Zunhua area): the government requires steel mills to reduce production (output is currently uncertain). It also reflects that the implementation of the environmental protection policy is relatively strict, and basically all of them have been implemented.

D blast furnace plant (Fengrun area): Benxi Iron and Steel Plant has been interviewed by the government and asked the blast furnace to stop production. At present, production of two small blast furnaces (550 and 680 cubic meters) is expected to stop for about 20 days, affecting the average daily output of 15, 000 to 20, 000 tons.

Overall, the environmental protection and production restrictions do improve compared with the previous efforts, but the affected area is smaller.

From the point of view of the influence varieties, it mainly affects the products such as building materials, section steel, strip steel and so on, but has a limited impact on the supply of hot coil.

From the point of view of the influence on the type of steel mill, it has a lot of influence on the billet adjusting plant, but the influence on the blast furnace plant is limited.

And according to the steel mill research feedback, in the current general coil production now the profit is OK, even in the later stage has the preparation to turn the hot metal to the production hot rolling. Therefore, in the case of environmental protection and production restriction policy has always existed, the production restriction has become stricter in the hot roll spot price is difficult to wave a big splash. Spot prices for short-term hot rolls are still expected to fall.

Spot market:

Today's mainstream market spot price decline varies from size to size, the transaction situation of the market differentiation. Mainly due to raw materials, coking coal, coke and iron ore futures prices fell, leading to market panic, coupled with Friday's poor performance of macro data, so the market bearish mood is strong. Among them,

Shanghai market: the spot price of hot volume fell 50 yuan to 60 yuan / ton, the mainstream price was 3750 yuan to 3770 yuan / ton, the transaction price performed well at low price, and there was almost no trading volume at high price. Mainly due to the fact that Jianlong spot resources have reached the market, and the spot resource prices are lower, causing great interference to the spot prices of other steel mills, coupled with the sharp drop in the black futures market today, as a result, the rigid demand in the market is already weak, the mood of terminal procurement is even lower.

Tianjin market: the spot price of hot volume fell 40 yuan 50 yuan / ton, the mainstream reported 3740 yuan 3760 yuan / ton, the transaction performance is still poor. Mainly due to, first, Tianjin market arrival is still less, scarce specifications are more. Second, Tianjin and the areas around Tianjin are still being shunned by Tangshan and other places. Third, the bearish mood of the downstream terminal is high, still in a wait-and-see state.

Lecong market: the spot price of hot volume fell 10 to 20 yuan / ton this year, and the mainstream price was 3870 to 3890 yuan / ton. Compared with other mainstream markets, the spot decline is smaller, the transaction is still weak. Mainly because, at present, the market spot resources are less, the scarce specification is many. [SMM Steel]