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[brief comment on SMM Hot Volume] the news of production restrictions is flying all over the world, whether traders are worried or happy.
Jun 24,2019 16:56CST
translation
Source:SMM
The content below was translated by Tencent automatically for reference.

Under the influence of Tangshan environmental protection and production restriction news, the spot price and futures price of hot coil rose sharply today, of which the national average price of hot coil rose 77.2 yuan / ton to 3890.3 yuan / ton, hot coil futures rose 86 yuan / ton to 3846 yuan / ton, and the current base difference shrank to 44.3 yuan / ton. And as of today, the national average price of hot rolls has rebounded by 114.7 yuan / ton from the lowest point of the current round of 3775.6 yuan / ton. Hot volume futures rebounded from the lowest point of the current round of 3577 yuan per ton.

However, it is worth noting that the trend of speculative trade and terminal demand in the market is divided, in which speculative trade is more actively boosted by news, while terminal demand is still more wait-and-see. Mainly because, before Tangshan environmental protection production restriction news has always existed, and this production restriction intensity has increased, but at present is in the news hype stage, the concrete influence how many output as well as the influence time, the terminal has not yet formed the concrete concept, in addition, the downstream industry is in the off-season, the terminal replenishment warehouse hoarding demand is weak, so it is still in the wait-and-see state.

 

In terms of different markets:

 

Shanghai market: today's spot price rose 70 to 80 yuan / ton, the mainstream reported 3880 to 3890 yuan / ton, the transaction situation has improved slightly, mainly speculative trade. In terms of mentality, the news of environmental protection and production restriction in Tangshan has no great impact on the mentality of traders. The main reason is that the steel mills with greater impact on Tangshan limited production are less in Shanghai, while the steel mills with more production in Shanghai, such as Shougang, are less affected by the limited production, and there is no great change in output as a whole. However, due to the current speculative trade in the market is more active, so there is a short-term support for the current spot prices.

 

Tianjin market: today's spot price rose 50 to 70 yuan / ton, the mainstream reported 3800 to 3850 yuan / ton, the transaction is average. In terms of mentality, traders are still in a state of wait-and-see on the current production restrictions. Mainly because, the early environmental protection production limit has been in the state of big thunder and small raindrops, and the size of the production limit has not yet been reflected in the market or data, coupled with the current demand has not been boosted by the news, so traders believe that after the speculation, if not implemented, then the spot price is still at risk of correction.

 

Lecong market: today's spot price rose 70 to 80 yuan / ton, the mainstream reported 3980 to 4000 yuan / ton, the transaction is weak. In terms of mentality, most traders believe that the news has played a role in stopping the decline, if the production restriction measures are implemented, there is still room for spot prices to rise in the later period. In addition, some traders believe that Tangshan's environmental production restrictions are mostly measures taken by the government to control the profits of steel mills. According to SMM statistics, the current steel mills are almost on the verge of making a profit (the profit of the hot rolling mill is 70 to 90 yuan / ton), so the Tangshan government wants to use the environmental protection policy to adjust the output of the steel mill and shrink the output of the steel mill in order to control the profit of the steel mill. [SMM Steel]

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