Home / Metal News / Steel & Iron Ore / [summary of SMM hot roll cycle] the fundamentals continue to weaken this week. Can we make a big turnaround next week?
[summary of SMM hot roll cycle] the fundamentals continue to weaken this week. Can we make a big turnaround next week?
Jul 19,2019 17:49CST
translation
Source:SMM
The content below was translated by Tencent automatically for reference.

[review this week]

Spot: as of Friday, the national average price of hot roll is 3895.8 yuan / ton, compared with 3886.4 yuan / ton last week.

Futures: as of Friday, the national settlement price of hot volume is 3869 yuan / ton, up from 3853 yuan / ton last week + 16 yuan / ton.

This week's hot roll period is now both up and then down. Overall, although the social database continued to accumulate as the mainstream market continued to arrive this week, the fundamentals continued to weaken, but in all kinds of news (the new policy requires all rolling mills in Tangshan to stop production) and macro data improved more than expected (sales of all kinds of excavators in June were 15121, up 6.58% from a year earlier; retail sales of broad passenger cars in June were 1.8 million, up 4.9% from a year earlier. ), demand reversed slightly in the off-season, and the transaction situation rebounded significantly compared with the previous period.

At the same time, this ore again new news, stimulate iron ore prices continue to rise, coupled with the recent expansion of production restrictions led to Jiangsu, Shanxi and other places coking enterprises production restrictions, stimulating coke prices to rise, so raw material prices continue to rise.

Therefore, under the pessimistic performance that fundamentals continue to weaken, it is gratifying that spot prices have not loosened and remained unchanged this week.

 

[fundamentals]

1. Supply side: steel mills will increase production and share production costs, and supply may continue to be under pressure next week.

Recently, the production situation of steel mills in various regions has been comprehensively followed up. To sum up,

So overall, there is a good chance that the supply situation will remain high next week. However, it is worth mentioning that in early August, Tangshan environmental protection production and reduction will be gradually reflected in the market, coupled with the rise in raw material prices, compression of hot rolling steel mill production profits, or will lead to steel mills have a greater willingness to reduce production, so it is expected that the supply pressure in August may be gradually alleviated.

2. Demand side: macro data is better than expected, demand is slightly released, and demand may improve next week.

This week, because the macro data improved more than expected, the terminal wait-and-see demand was slightly released (some market traders reported that the Kaiping data reached the recent maximum value this week), so although it is still in the traditional off-season, but in the downstream macro data and some steel mills to boost the stimulus, the later may gradually improve out of the off-season.

 

[outlook for next week]

From the supply side and demand side next week, the fundamental performance may improve compared with the early stage, coupled with Tangshan environmental production restrictions once again strengthen the support of raw material prices, it is expected that the probability of spot prices next week is expected to show a strong trend.

 

[inventory]

Although the general treasury continued to increase this week, the fundamental performance is still relatively weak, but the growth of factory and social libraries has slowed down, and when the late Tangshan environmental production restrictions are reflected in the market, the inventory situation may take a turn for the better.

On the treasury side: the total inventory of hot rolls in the country this week was 3.4031 million tons, + 1.6 percent compared with the previous week and + 6.3 percent over the same period last year.

Steel plant inventory: this week's hot rolling mill warehouse of 995300 tons, month-on-month ratio of + 3.1%, compared with the same period last year-6.9%.

Social inventory: this week hot rolled social warehouse 2.4078 million tons, month-on-month ratio of + 1.0%, year-on-year + 12.9%.

 

[macro and policy aspects]

1. Ministry of Ecological Environment and other four ministries issued the "Comprehensive Control Plan of Air pollution in Industrial furnaces and kilns"

The Ministry of Ecology and Environment and other four ministries issued the Programme for the Comprehensive Control of Air pollution in Industrial furnaces and kilns. The key tasks mainly include: (1) strengthening the adjustment of industrial structure. Strict environmental access for construction projects. It is strictly forbidden to increase the production capacity of iron and steel, coking, electrolytic aluminum, casting, cement and flat glass, and strictly implement the measures for the replacement of production capacity in iron and steel, cement, flat glass and other industries. We will increase backward production capacity and eliminate substandard industrial furnaces and kilns. (2) to speed up the replacement of clean and low carbon fuels. (3) to carry out in-depth control of pollution. We will promote industrial furnaces and kilns to meet the discharge standards in an all-round way. (4) to carry out the comprehensive renovation of industrial parks and industrial clusters.

2. Transmission by the National Development and Reform Commission: resolutely prevent the steel and coal sector from reigniting from production capacity.

On the morning of 16 July, the National Development and Reform Commission held a regular press conference on the theme of July. Meng Wei, deputy director of the political research office and spokesman for the committee, said: in the third quarter, the relevant departments will carry out supervision and inspection of the work of eliminating backwardness and resolving excess capacity in the steel and coal sectors, so as to resolutely prevent the resurgence of withdrawn production capacity. In the field of iron and steel, the National Development and Reform Commission, in conjunction with the Ministry of Industry and Information Technology and the State Administration of Market Supervision, issued the "Circular on the Prevention of excess production capacity in the Iron and Steel Industry". It puts forward clear requirements for local governments to effectively prevent new production capacity in violation of laws and regulations and the resurgence of "ground strip steel". In view of the report on the illegal and illegal new production capacity of Taidu Iron and Steel and Guoxin Industry in Guangdong Province, the relevant member units of the interministerial joint meeting were organized to carry out on-the-spot verification, and the results of the verification were informed.

3. Supervision and upgrading of real estate trust return in an all-round way

Since the second half of the year, the relevant departments have strengthened the "window guidance" for trust companies under their jurisdiction. According to the information disclosed by some regions, the positive and negative list of "can and can not" of the real estate business of trust companies in the second half of the year is clear: equity income rights, specific asset income rights, or the way of arranging bets for housing enterprises to provide land front-end financing and other models have been suspended, can only do in line with the "432" (project four certificates complete, 30% capital and secondary qualification) requirements of loans, real equity investment; In terms of industry investment, indemnificatory housing, industrial incubation, urban renewal or old city transformation, rigid demand housing and other projects have been strongly encouraged. The rectification of real estate trust is targeted, therefore, the leverage of the property market will continue to be limited, real estate speculation will not get out of control, "housing does not speculate" the direction will not deviate. At the same time, it can also give full play to the decentralized financing risk of real estate trust, and promote the real estate docking of the real economy and the needs of the people to live in peace. 4. It is prohibited to carry out environmental protection classification evaluation in 15 industries, such as iron and steel, coal and so on.

China will make greater efforts to regulate the production limit of high energy-consuming industries more accurately. It is reported that the relevant departments are planning to carry out performance grading evaluation and differentiation management in 15 key industries, such as iron and steel, coal, cement, chemical industry and so on. Through the production process level, treatment technology and other indicators to formulate performance rating rules, the industry enterprises will be divided into A, B, C grades, in Beijing, Tianjin and Hebei and surrounding, Yangtze River Delta region, Fenwei Plain and other key environmental protection areas, according to different weather conditions, according to the grade to take different measures to stop production.

In May and June, 717 billion yuan of new local bonds were issued to the largest number of land reserves.

In June, 31 provinces (autonomous regions and municipalities) issued 183 local bonds, totaling 899.551 billion yuan, an increase of 196 percent over the previous month, according to data released by the Ministry of Finance. Of this total, 717.035 billion yuan was issued for new bonds, and the largest amount of funds was invested in land reserves, reaching 190.315 billion yuan, accounting for 26.5 percent of the total. The data show that the new bond funds in June will be used for transportation and transportation 125.829 billion yuan; municipal construction 56.371 billion yuan; land reserve 190.315 billion yuan; indemnificatory housing, shantytown transformation 184.862 billion yuan; education, culture and health, social security 43.005 billion yuan; ecological construction, environmental protection 33.261 billion yuan; poverty alleviation, agriculture, forestry and water 53.481 billion yuan; other 29.911 billion yuan.

6. China's GDP grew 6.3 percent in the first half of the year compared with the same period last year.

The gross domestic product (GDP) in the first half of the year was 45.0933 trillion yuan, an increase of 6.3 percent over the same period last year, according to data released today by the National Bureau of Statistics. Generally speaking, the operation of the national economy in the first half of the year was within a reasonable range, continuing the overall steady and steady development trend. On a quarterly basis, it rose 6.4% in the first quarter from a year earlier and 6.2% in the second quarter. In terms of industry, the added value of the primary industry was 2.3207 trillion yuan, an increase of 3.0 percent over the same period last year; the added value of the secondary industry was 17.9984 trillion yuan, an increase of 5.8 percent; and the added value of the tertiary industry was 24.7743 trillion yuan, an increase of 7.0 percent.

7. China's social financing scale increased by 2.26 trillion yuan in June

China's social financing increased by 2.26 trillion yuan in June, expected to be 1.9 trillion yuan, compared with a previous value of 1.4 trillion yuan. China's new yuan loans in June were 1.66 trillion yuan, expected to be 1.675 trillion yuan, after a previous value of 1.18 trillion yuan.

8. Ministry of Commerce: urge the US side to correct its erroneous practices in the countervailing investigation against China

On July 16, Geneva time, the WTO released the report of the Appellate body against the implementation of China v. US countervailing measures (DS437), ruling that the US side was involved in 11 cases of countervailing measures in violation of WTO rules. The spokesman said: in this case, the original panel of experts and the appellant body have ruled that the countervailing measures involved in the case violated the WTO rules and asked the US side to correct its violations. However, it is regrettable that the United States continues to use violations in the process of implementing the WTO ruling. The decision of the Appellate body once again proves that the United States has violated WTO rules and repeatedly abused trade relief measures, which has seriously damaged the fairness and fairness of the international trade environment.

[summary of major events]

1. He Wenbo of the China Iron and Steel Association: 98% of the increase in crude steel output in the first five months was used in domestic steel consumption demand.

Crude steel production rose 10.2 per cent in the first five months of this year from a year earlier, an increase of 37.44 million tons. Of these, 98 per cent of the increase in output was spent on domestic steel consumption demand, and 2/3 met the demand in the construction sector. The current reality is that the continuous investment in capital construction has brought about the continuous growth of iron and steel demand, and China's steel industry has met the supply and demand of iron and steel materials for production and construction in the development of the national economy. Without a high increase in steel production, the current scale of infrastructure could not be achieved.

2. Ministry of Finance: the national general public budget revenue exceeded 10 trillion yuan in the first half of the year.

On the morning of the 16th, the Ministry of Finance released the national revenue and expenditure situation for the first half of this year. In the first half of the year, the country's general public budget revenue exceeded 10 trillion yuan, an increase of 3.4 percent over the same period last year, of which non-tax revenue increased by 21.4 percent. At the same time, the national general public budget expenditure exceeded 12 trillion yuan, an increase of 10.7 percent over the same period last year, and the growth rate was significantly faster than that of income.

Retail sales of broad passenger cars and new energy passenger cars increased in March and June compared with the same period last year.

Ride federation: retail sales of broad passenger cars in china rose 4.9% in June from a year earlier to 1.8 million, the first year-on-year increase in 13 months. At the same time, although the new energy passenger car market entered the subsidy transition period in June, manufacturers wholesale new energy vehicles achieved a good sales level of 134000 units, up 38.7 percent from the previous month and 98.7 percent from the same period last year. It shows that new energy passenger cars are gradually getting rid of their dependence on policy. From January to June this year, the country sold 577000 new energy narrow passenger cars, an increase of 65.9 per cent over the same period last year.

4. In the second round, the first batch of central eco-environmental protection inspectors were all stationed.

The second round of central ecological and environmental protection inspectors first stationed in Shanghai, Fujian Province, Hainan Province, Chongqing, Gansu Province, Qinghai Province, as well as China Minmetals Group Co., Ltd. (hereinafter referred to as Minmetals Group), China Chemical Group Co., Ltd. (hereinafter referred to as Sinochem). According to the arrangement, the first batch of central eco-environmental protection inspectors in the second round will be stationed for one month. During the period of arrival, each inspection team set up a special duty telephone and post office box respectively to accept letters and calls from the object of inspection on the protection of the ecological environment.

5. Dobao: the handling fee for iron ore transaction shall be adjusted to 1 / 10 / 10 of the transaction amount

The firm issued a notice that from July 18, 2019 (that is, July 17 night trading section): iron ore futures trading fee standard adjusted to 1 / 10,000 of the transaction amount. Among them, the iron ore futures 1909 contract intra-day trading fee standard adjusted to the transaction amount of 2.5%, non-day trading fee standard is 1 / 10 000 of the transaction amount. The standard of intra-day trading fee for iron ore futures 2001 contract is adjusted to 1.5 / 10,000 of the transaction amount, and the standard of non-intra-day trading fee is 1 / 10 / 10, 000 of the transaction amount.

6. More than 6000 km of urban rail lines were put into operation in mainland China in the first half of the year.

According to the China Urban Rail Transit Association, as of June 30, 2019, a total of 37 cities in mainland China had put into operation 6126.82 kilometers of urban rail transit lines. Wenzhou and Jinan have been added to two operating cities, 12 new operating lines and 365.32 km of new operating lines.

7. Chongqing-West Chongqing-Kunming High Speed Railway strives to start construction during the year

On July 10, with the conclusion of the "216" cooperation between Chongqing and Sichuan, the two provinces and cities will jointly promote the integrated development of Chengdu-Chongqing urban agglomeration, which includes 204 major projects and events, of which 70 are infrastructure interconnection projects.

8. The scale of tax reduction for two rounds of value-added tax deepening reform is expected to exceed 1.4 trillion yuan.

According to the State Administration of Taxation, the overall net VAT tax cut was 221.8 billion yuan from April to May 2019, with tax cuts for all industries. Among them, the effect of tax reduction in manufacturing industry is obvious, with a net tax reduction of 97 billion yuan from April to May, ranking first in all industries, and a net tax reduction of 80.8 billion yuan in wholesale and retail industries.

9. Trump will sign an executive order to promote the use of steel produced in the United States for government contract projects

White House trade adviser Navarro told Fox News that President Trump will sign an executive order today to promote the use of domestic steel in federal contract projects, requiring a national production rate of 95 percent of the steel used in government projects.

In the first half of 2019, the three major indicators of national shipbuilding continued to lead the way in terms of one liter and two drops in international market share.

According to the website of the Ministry of Industry and Information Technology, from January to June 2019, the national shipbuilding capacity was 19.66 million deadweight tons, an increase of 4.2 percent over the same period last year, of which the total tonnage of seagoing ships was 5.71 million revised gross tons, and the order for new vessels was 12.06 million deadweight tons, down 46.9 percent from the same period last year, of which 3.93 million gross tons were revised for seagoing ships. As of the end of June, orders for hand-held ships were 81.72 million deadweight tons, down 14.3 percent from the same period last year, of which 26.84 million were revised gross tons for seagoing ships, accounting for 90.8 percent of the total. In the first half of this year, China's shipbuilding completion, new orders and hand-held orders accounted for 37.7%, 51.8% and 42.9% of the world market share in deadweight tonnage, respectively.

11. Shanxi Province joins the off-peak production of key industries

From October 1, enterprises that fail to complete the task of annual governance and transformation (including unorganized emission management) will stop production. Iron and steel, building materials, coking, casting, non-ferrous, chemical and other high emission industries, to achieve the corresponding industry air pollutant emission limit and complete the requirements of unorganized emission control, the heating period to implement differential cross-peak production. Production facilities that belong to the category of "Industrial structure Adjustment guidance Catalog", with a production limit of 40%. Among them, located in the district and the surrounding area of 10 km, the production limit of 50%, does not affect the production safety of the case can be taken to stop production error peak. Enterprises that belong to the category of industrial policy incentives have a production limit of 20%. Among them, enterprises located within 10 kilometers of the built-up area and the surrounding area, with a production limit of 30 percent.

12. The output of household appliances increased in June compared with the same period last year.

In June, China produced 7.461 million refrigerators, an increase of 2.8 percent over the same period last year to 42.504 million units from January to June, an increase of 4.5 percent over the same period last year.

In June, China produced 21.331 million air conditioners, an increase of 2.4 percent over the same period last year to 119.788 million units from January to June, an increase of 10.2 percent over the same period last year.

In June, China produced 6.502 million washing machines, an increase of 19.8 percent over the same period last year to 37.325 million units from January to June, an increase of 9.2 percent over the same period last year.

In June, China produced 14.048 million color TV sets, down 1.7 percent from January to June, an increase of 4.6 percent over the same period last year.

 

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