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[SMM Black current Weekly Review] Environmental protection and production restrictions are changing the vicissitudes of supply, once again holding your hand is not a dream!
Jun 28,2019 18:54CST
The content below was translated by Tencent automatically for reference.



Current weekly review (evening of 28 June)



Play back the current market this week.


1. The main logic of the multi-empty game this week includes, but is not limited to.

(1) at the G20 summit, the market is more looking forward to it; whether the trade war between China and the United States will shake hands and make peace, the market is more looking forward to it.

(2) the Federal Reserve is on the cusp of redeeming monetary easing.

(3) A significant review of the US dollar index and the RMB exchange rate.

(4) the scale of local bond issuance holds the secondary power, and the adjustment of counter-cyclical factors continues to accelerate.

(5) the domestic stock market is rebounding on the road.

(6) although the seasonal demand converges, it is still not sad.

(7) the accumulation database is not sustainable.

(8) the high yield of RB continued to look back.

(9) the high demand for iron ore is exhausted, and the port inventory continues to decline.

(10) Coke fell to the ground in the first round of price reduction, and in the game of steel coke in the second round of price reduction.

(11) Environmental protection, limited production, thunderstorm, etc.

(12) the profit repair of short-flow electric arc furnace is on the way again, and the capacity release in non-production area is now in progress.

(13) the demand for coke is double-edged for environmental protection and production restriction in Tangshan area, and the environmental protection and production restriction in Shanxi province is to be seen.


two。 Spot: this week the steel market prices hit bottom rebound as scheduled: since the low price scattered back, the average increase of about 150 (Shanghai region 200 left).

The price of steel billet in Tangshan area, from the lowest price of 3410 yuan / ton, the highest price of 3620 yuan / ton, a cumulative increase of 210 yuan / ton, weekly closing 3620 yuan / ton (last week closed 3460 yuan / ton, a weekly increase of 160 yuan / ton).


Market mentality: a wise man is open-minded, but a fool is full of feet.



3. Futures:


RB1910 contract:


Looking up at the sky to laugh out the door, our generation is not Artemisia 4095.


Within the week, it rebounded sharply between 3835 and 4095, closing 4065 per week (3859 last week).


HC1910 contract:


If you want to see thousands of miles of scenery, please climb to a high-rise building 3998.


Within the week, it rebounded sharply between 3740 and 3998, closing 3953 per week (3760 last week).


Iron ore l1909 contract:


Looking back (779) a smile 100 Mei Sheng (844).


During the week, he continued to get angry between 779 and 844, closing 838.5 a week (820 last week).



Demon Jiao J1909 contract:


Wailing six troops all chimera vegetarian, fate environmental protection to limit production.


It fluctuated weakly between 2049 and 2121 during the week, closing 2071 per week (2089.5 last week).


Coking coal JM1909 contract:


A woman with small feet, a slender step.


During the week, the horizontal disk fluctuated between 1366 and 1401, closing 1392.5 per week (1393.5 last week).



Next week's current forecast.


1. Spot: concussion forward!


two。 Futures:


RB1910 contract: between 3880 and 4100.


HC1910 contract: between 3780 and 4000.


Iron ore contract l1909: between 770 and 850.


Demon Jiao J1909 contract: between 2000 and 2150 concussion.


Coking coal JM1909 contract: between 1360 and 1430.


< 3 > suggestions for current operation.


1. On the spot side:


Has completed the replenishment of inventory: every high slightly greater than in, every low in slightly greater than out of the smooth rolling operation is appropriate.

Unfinished replenishment depositor: put down the concern, gradually replenish the inventory on the low side, although it is still late.



two。 Futures:


The end of the wood: the upper edge of the value near the empty single appropriate amount of intervention, the lower along the value near the trend of multiple single re-intervention.



Iron ore i1909 contract:


The impact of environmental protection and production restrictions on iron ore demand convergence will be gradually reflected next week.

Rolling operation in the range of 770 to 850 is appropriate:

The empty single intervention near the upper edge value and the multiple single intervention near the lower edge value.



Coke J1909 contract:


The author predicts the probability of limited production of environmental protection in Shanxi.

In the range from 2000 to 2150, it is appropriate to spread more when it is low.



Coking coal: wait and see or every time along the value near the light warehouse layout operation is appropriate.



< 4 > Information and heart language.

1. The global focus on tomorrow's G20 summit, although the market is more looking forward to Sino-US trade frictions, but the author still foolishly know yesterday's play, details of yesterday's words, do not repeat.

two。 This round of Tangshan environmental protection thunderstorm peers such as the author forward-looking forecast to arrive as scheduled, the substantial change in the relationship between supply and demand will be gradually reflected in the later period. As to whether it affects on a large scale? The author once said: degree is the highest wisdom, it is impossible to let the steel price bounce is the upper limit. Therefore, local areas such as Shanxi Province are certain to be high probability events. Bulls, don't be paranoid.

3. How to correctly understand the energy return period of arc furnace?

Steel prices fell to the lowest point did not cover the arc furnace gross profit, although there are a few stop production, maintenance, but the overall capacity expansion has not effectively stopped, superimposed environmental protection production limit area is still within the limited production range. Therefore, the stable speed of capacity expansion of electric arc furnace is a high probability event.

4. On the demand side?

The author has stated N times that demand is resilient, and that although the growth rate of new real estate starts fell to 10.5% in May compared with April, consider a three-month feverish period of superimposed infrastructure to make up for the shortcomings of the rush on the road. As a result, demand resilience lasted at least until August. Don't worry about the ancients!

The 70th anniversary of the National Day is a double-edged sword for supply and demand, at that time to verify the speed difference.

6. Iron ore.

Starting from the fundamentals: 1) the supply is tight and there is no essential change, although the recovery of most of the Brazilian Vale tailings has an impact on the main contract in recent months; 2) with the environmental protection to limit production, there is no doubt that the original high demand is exhausted. But from a policy point of view: the meaning is far-reaching, the author tends to fight the diamond price of the government combination is already on the way (although the author's forward-looking forecast is more optimistic than the current belatedly enlightened view). In short, bulls take it easy, not excessive willfulness. Only from the technical point of view, looking back at 750 left is necessary, as to whether the delivery month is forced to do no deduction.

7. Pay attention to the thread production of Jiangsu Province, environmental protection to limit the production of thunder and rain sound, but a large range of production restrictions is a small probability.

8. Stage steel has flat water or rising water spot (three types of brands), need to look back on the spot to follow; short rhythm still maintain the judgment of moving forward after the return.


Enclose weekly comments and information.


1. Steel mills used to drink Maotai as a mineral spring can only be a memory collection, re-explore the way to reduce costs has become the current option; the theory of "tragedy of the Commons" is likely to be put into practice in the fourth quarter.

two。 Re-analysis of environmental protection and production restriction.

Considering the current situation of industry fundamentals, macro-economy, 70th anniversary of National Day, diamond price of iron ore, the author tends to environmental protection and production restrictions in July as a whole, "moderate rain" is a high probability event. I don't know.

3. This cycle is strong and weak, not only in the telephone market between Chinese and US heads of state, but also in the revision of expectations.

4. Re-verification of the relationship between supply and demand

Demand side:

Macroeconomic downward pressure warning has not been removed, the acceleration of counter-cyclical factor adjustment is inevitable, and there is no doubt that infrastructure construction is running on the road; although the growth rate of newly started real estate area has dropped, there is no Qiang on the whole.

At least in a short period, I have said that demand convergence is inevitable, do not use chicken feathers as a sharp arrow. The return of retaliatory demand after the rain is also inevitable, of course, regional differences, decided to return first and later.

In a word, the author still maintains: the judgment of demand entanglement. There is no worry for the "ancients".

Supply side:

At present, there is not much difference between the static long process gross profit and the short process electric arc furnace. Next, overhaul, stop production superimposed environmental protection and limited production rain, supply-side marginal contraction probability is already on the way.

5. The mutual infection between the material end and the raw material end of the futures disk is mainly emotional catharsis disturbance, and finally return to the essence. Staying steady is the right way.

6. Analysis of iron ore.

6.1. The decline in port inventories has converged sharply this week, with a clear signal that the short pace is peaking.

6.2. North Korean iron ore imports are full of information today, regardless of the results, at least indicating that the current diamond prices have alarmed the highest levels. From the point of view of the will of the country, the probability of beating the diamond price combination is on the way.

In short, the author suggests: the principle of more than profit rest is the king! Practice the author's advice, sugar cane the sweetest section to eat enough, do not ride the wall pie to coax!

7. Inventory inflection points are not the only footnotes to falling prices.

At present, the social database is about 5.6 million tons, the market so-called late bearish language inventory pressure, just whistling in the dark. Not to mention the persistence of doubt, the author tends to think that the next week or two to look back is a high probability event.


< 5 > trend analysis and views remain unchanged.


Details consultant Lu Qingping 021 51595781


(statement: this article is made and published exclusively by SMM Steel under the exclusive license of the author, and may not be reproduced without authorization)


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