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[brief Review of SMM Thread] what is the impact of the first week of production restriction?
Jul 4,2019 18:26CST
The content below was translated by Tencent automatically for reference.

This week, as the first week after the production limit, the total warehouse returned to its cumulative state, up 58800 tons to 7.8994 million tons. Among them, the growth of social database was the leading factor, with an increase of 101000 tons to 5.7431 million tons. Plant and warehouse 2.1563 million tons continued to reduce the storage model, but the decline slowed down, the reduction rate decreased by 74000 tons.

Supply side: according to Tangshan, Anyang once again issued the relevant production restriction policy shows that the implementation of steel mills has been loosened. In other regions, although spot prices have fallen slightly in recent days, the cost of long-process steel mills in coastal areas is estimated by SMM to be about 3699 yuan per ton, and the thread profit of steel mills is still there. On this basis, the steel mill has a strong willingness to produce, and has not yet been willing to reduce production. Therefore, the thread supply is still in high position. But on the demand side: boosted by the G20 summit news, thread spot rose sharply, with the national average price rising to 4133.1 yuan / ton on Monday, up 151.6 yuan / ton from the weekly average price of 3982.5 yuan / ton last week. The market transaction situation began to trade hot on Saturday, the market mentality is optimistic, the terminal demand is released, many traders also begin to replenish the stock hoarding. However, the relevant production restrictions released in Tangshan and Anyang on Tuesday were loosened, and the macro news from China and the United States led to a decline in futures and a pullback in spot prices, resulting in a gradual pessimism in the market mood and a decline in the situation of leaving the warehouse. In the case that the terminals only maintain rigid demand procurement after the active replenishment of the warehouse, the factory warehouse is reduced, and the growth of the social database is taken for granted. Although the general treasury showed an upward trend this week, but according to the implementation of SMM research, the actual implementation of the production limit surface loosening the implementation of the steel plant is more stringent than the previous production restrictions, the subsequent supply will be reduced, can ease market pressure.


Spot market:

Today, the national spot basically remained stable, and the market transaction situation also increased slightly compared with yesterday. Mainly due to small fluctuations in futures, the market has a certain transaction. However, with the afternoon futures fall, and inventory data is not optimistic, the market in addition to rigid demand procurement and return to desolation.

Shanghai market: today's spot thread to maintain stability, Shagang quoted price of 3990 yuan / ton. Today's transaction situation is slightly worse than yesterday, although the market bearish but the release of terminal demand is more stable, traders have a small upside down.

Hangzhou market: today's spot price of screw thread is stable, Shagang quoted price of 4050 yuan / ton. The overall situation, the morning trading is good, but with the futures down, the spot trading situation then turned cold. The overall transaction situation, in addition to the low price of three types of brand shipment situation is OK.

Beijing market: the spot price of thread in Jinghe Iron and Steel Co., Ltd. has been slightly adjusted by 10 yuan per ton to 3930 yuan per ton. The transaction situation is OK, the demand is stable release.

Guangzhou market: today's spot price is 4140 yuan / ton. The transaction situation is the same as yesterday, the performance is mediocre, the actual shipment situation is general.


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