"from the point of view of changes in supply and demand, the market price of rebar will fluctuate upward in July, and some important factors affecting the market trend still need to be paid attention to." This is Liang Taigeng, general manager of Shanghai Hualei Enterprise Development Co., Ltd., on the market price of thread steel in July.
Reviewing the trend of the rebar market in June, Liang Taigeng said that in June, as the benefit of rebar was the best among all the major categories of steel, steel mills preferred the production and production of rebar, and the weekly output of rebar reached an all-time high. In addition, demand entered the off-season, and supply exceeded demand, resulting in the adjustment of rebar prices in the first and middle of June. In mid-June, the market price of rebar was below the cost line of electric furnace steel in some areas, resulting in a reduction in the output of electric furnace steel in some steel mills in some areas. In addition, the Tangshan area issued the strictest environmental protection policy to limit production, and in late June, the price of rebar steel stopped falling and rebounded. For example, on June 24, the quotation of three-stage rebar in Shanghai market rose continuously in one day, up 60-80 yuan / ton.
When talking about why the rebar market price fluctuated upward in July, Liang Taigeng analyzed it from the two aspects of supply and demand.
First of all, from the July rebar market supply, there are many factors that affect the capacity release of steel mills. For example, environmental protection limits production, restricting the release of steel plant capacity. In July, the intensity of environmental protection and production restrictions will be further strengthened, especially in Hebei, Shanxi, Shaanxi, Shandong and other areas, where local steel mills will limit production because of environmental protection, which will have a direct impact on the production of rebar and the market supply of rebar.
"there is another factor affecting the supply of rebar in July." Liang Taigeng said: "usually in July and August, is the regular inspection period for iron and steel enterprises, will also affect the supply of rebar market, it is predicted that the supply of rebar will be reduced."
In addition, the factors affecting the supply of rebar market in July are the inspection of environmental protection and production restrictions and illegal production capacity by relevant state departments, the inspection of production safety and the implementation of various policies and measures, such as the implementation of the new national standard of rebar. The implementation of these policies and measures is an important factor restricting the capacity growth of steel enterprises in July and August this year.
From the July rebar market demand level. In June, due to the influence of the rainy season in the southern region, the construction steel market, such as rebar, entered the traditional off-season, and the demand intensity weakened. In addition, the funds in June this year were relatively tight than those in June last year, especially for infrastructure projects, which affected the demand for rebar in June. In July, with the end of the rainy season in the south, especially in East China, where the capital market has the greatest impact on the market price of rebar, it is predicted that after the emergence of plum, the construction of the construction project will speed up the progress, and the demand for rebar will gradually increase. Compared with June, the increase in demand is a high probability.
In addition, the recent release of special infrastructure debt documents and local debt issuance reached a peak in June. On June 25, 16 local government bonds were successfully issued in Shandong, Hunan and Guizhou, with a total issuance scale of 85.498 billion yuan. So far, the total issuance of local government bonds in June reached 736.383 billion yuan, and it has been disclosed that the issuance plan for the last week of June has exceeded 200 billion yuan. On this basis, it is estimated that the issuance size may reach $800 billion in June, a new high for the year. As a result, infrastructure funding was looser in July than in June, which is bound to lead to an increase in real demand in the rebar market.
In addition, the number of real estate under construction in an important sector of rebar demand is still very large, although some real estate data in May this year are weak, mainly due to the high data in the same period last year. The implementation of the new architectural design standards into the construction stage and the vigorous promotion, development and policy support of assembled construction projects will enhance the increment of demand. The scale of real estate under construction is the real reflection of the real estate industry on the demand for rebar, and the toughness is still very strong.
Liang Taigeng said: on the whole, throughout July, with the increase of environmental protection and production restrictions and the routine maintenance of steel enterprises, the supply of rebar market has been reduced, while in July, the end of the rainy season in the south and the arrival of a large number of infrastructure projects and centralized distribution of funds have increased the demand for rebar, which will determine that the market price of rebar will gradually rise amid the concussion in July.
Finally, Liang Taigeng reminded traders to focus on some important factors affecting the thread steel market in July, mainly reflected in the following aspects:
First, we should focus on the actual implementation of environmental protection and production restrictions. Nowadays, various localities are stepping up efforts to improve environmental protection, especially Hebei, Shanxi, Shaanxi, Shandong and other areas, issued a series of environmental protection production restrictions policies and measures. For example, the Tangshan Municipal people's Government Office "notice on stopping production restrictions for Iron and Steel Enterprises in the whole City" requires local districts to formulate a list of stop production limits for iron and steel enterprises in the light of the actual situation, of which some iron and steel enterprises limit production by 20%. Other iron and steel enterprises limit the proportion of production to 50%. Then, the actual implementation of environmental protection and production restrictions in various localities, and the degree of impact on iron and steel output, need to be paid attention to. In addition, we should also pay attention to the spirit of the conference on ultra-low emissions held by iron and steel enterprises in Jiangsu Province at the end of June and the implementation of the implementation Plan for the Transformation of Ultra-low emissions in Jiangsu Province, and so on. These are important factors affecting the supply of rebar in July.
The second is to pay attention to the changing factors of the production cost of rebar. As the recent market price of rebar in some places is close to the cost line of rebar, the role of cost support in recent years is more prominent in the near future. Due to the impact of the dam break in Brazil and the hurricane in Australia, the iron ore market has recently seen an imbalance between supply and demand, with prices rising sharply, rising from less than US $60 per ton at the beginning of the year to more than US $110 per ton at the beginning of the year, reaching a new high in the past five years. Iron ore prices have been volatile recently. At the same time, we should pay attention to the impact of environmental protection on coke production and marketing of coking enterprises, and the change of coke market price. Since the beginning of this year, due to the rise in the price of iron and steel raw materials, steel production costs of iron and steel enterprises have increased by 300 to 400 yuan per ton. Therefore, in the later stage, we need to pay attention to the market price changes of iron ore, coke and other iron and steel raw materials, and support the cost of steel.
Third, pay attention to the changes of financial factors. The third quarter of this year is an important period for the landing of infrastructure projects, which is also an important aspect of the demand increment of the rebar market, especially the timely arrival of capital construction funds, which is an important factor to increase the demand.
Fourth, we should pay attention to the progress of the Sino-US trade negotiations and the impact on the direct and indirect exports of steel. If Sino-US trade frictions are mitigated through negotiations and tariffs are abolished, it will be conducive to the increase of steel exports and increase the demand for overall steel, but there are many uncertainties that need to be focused on.
Fifth, pay attention to the impact and changes of the steel futures market on the spot market. Recently, the relative price of the futures market is close to flat and may even rise, which is a rare phenomenon in June in recent years. This will stimulate the speculative demand of the market and the arbitrage strategy to increase the buying demand for spot resources and the replenishment of pre-oversold resources. In particular, attention should be paid to the locking or unlocking of the current set of resources in different periods, which has an impact on the supply and demand of the steel market, including rebar, resulting in increased market price fluctuations.
June 26, 2019