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[SMM Thread Analysis] Thread circumference carding: the contradiction between supply and demand is gradually alleviated, and the thread stock or "decadence" will be exhausted.
Jul 26,2019 17:40CST
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Source:SMM
The content below was translated by Tencent automatically for reference.

 

 

[review and Prospect]:

Futures: this week's snail trend is weak, as of today snail 1910 contract settlement price 3950, compared with Friday 3970 yuan / ton, down 20 yuan / ton.

Spot: the national average price of thread today fell 3.5 yuan / ton from 4041.6 yuan / ton last Friday to 4038.1 yuan / ton. The average weekly price fell 10. 3 yuan per ton, compared with an average of 4040.4 yuan per ton this week.

This week are now showing a weak consolidation trend, but spot performance is stronger than futures under the support of fundamentals, mainly due to the supply side, this week's thread production has been reduced due to losses in arc furnace steel mills in some areas where environmental protection limits production is superimposed. On the demand side, with the reduction of precipitation area, the rigid demand for building materials is weakened by the shackles of seasonal interference, and the release is more smooth than that in the previous period.

As far as next week is concerned, on the one hand, the Tangshan area will hold an ecological environment protection conference from 26 to 28, during which most steel enterprises will stubble the blast furnace for three days, and according to SMM research, the relevant steel enterprises will basically strictly implement the supply of building materials or slightly weaken the supply of building materials (according to SMM's preliminary estimate, if all the relevant steel enterprises' production equipment stops for three days, the supply of building materials will be reduced by 202200 tons). Moreover, recently, due to the rising scrap prices and weak steel prices, the profit and loss situation of electric arc furnace steel mills has been deteriorating (according to the SMM data model, as of today, the loss per ton of steel in electric arc furnace steel mills has reached 3950 yuan), steel enterprises in some areas have reduced production, and in the case of scrap prices do not show decline, the scope of subsequent production reduction may be further expanded; on the other hand, high temperature interference is not as good as precipitation, the release of demand is stronger than the previous period. In late July, the southern market came out of the "Meiyu" one after another, and high temperatures followed. However, according to SMM research, the construction site can choose to construct at the wrong time during the high temperature period (it is difficult to construct during the precipitation period). The actual construction period is even longer than that in the early stage, and traders have also reported that the actual shipment situation since the beginning of this week is slightly stronger than that in the previous period.

Finally, with the approach of August, after the ecological conference in Tangshan, there may be a new round of local environmental protection policies, coupled with the recent continuous air pollution prevention and control meetings, environmental protection policies in other areas except Tangshan can still be expected.

Therefore, in general, the spot price of thread next week may be slightly alleviated in the contradiction between supply and demand, if there is another stimulus of environmental protection and production restrictions, or take the road of strong concussion.

 

[fundamentals]

In terms of long-process steel mills, since late July, a number of provinces have held relevant meetings on environmental protection issues, and a new round of environmental protection production restrictions may come, although the current thread profit is still in the first place in the general steel variety, but under the passive production reduction, the thread supply will drop somewhat.

In terms of short-process steel mills, according to SMM research, at present, in addition to some areas due to the national steel price "slope", so the local electric arc furnace steel mills still have a small profit, most of the electric arc furnace steel mills are already in a state of loss, the willingness to reduce production is "ready to move."

2. Demand side: demand toughness is not reduced.

As the specific "transformation" of real estate investment funds into rigid demand for building materials takes about 6 to 9 months, according to the relevant data of the National Bureau of Statistics, the amount of real estate investment in the second half of 2018 is always higher than that in the same period of 2017. Rigid demand for building materials has good toughness.

On the other hand, with the "plum" in the south, the demand release has been suppressed and weakened, and according to SMM research, in the early days of the 70th anniversary of the National Day in October (around mid-September), construction sites in surrounding cities may be shut down, so before this, there may be a rush to work in the local area, and demand is expected to accelerate release.

[inventory]

The country's total thread inventory this week was 8.5343 million tons, an increase of 220400 tons from the previous month, an increase of 238600 tons over the previous week. This week, inventories in the plant increased by 41200 tons (+ 1.7 per cent) compared with the previous month, and the increase converged by 37500 tons. The social treasury, which rose 179200 tons from last week, continues to be cumbersome.

Although the factory treasury double increase, but the fundamentals have improved, the market mentality is weak but not pessimistic. With the late demand gradually emerging, and the late steel mill profit tightening and environmental protection production restrictions affect the supply, thread spot may gradually come out of the haze.

[macro and policy aspects]

1. The intensity of tax reduction and fee reduction is unprecedented, experts suggest that new ideas should be used to deal with the new financial situation.

Since the beginning of this year, the proactive fiscal policy has increased its efforts to improve its effectiveness, and the scale of tax reduction and fee reduction has been unprecedented. In contrast, with the value-added tax rate cut in April and the social security rate cut in May, unprecedented tax cuts have put pressure on the government's fiscal balance. Analysts said that the pressure of tax cuts and fees on fiscal expenditure is precisely conducive to transmission from the financial sector to various government departments, so as to reach a consensus to jointly adjust the expenditure structure and spend limited funds on the blade. "in a sense, this is the best time to adjust the structure of fiscal expenditure."

two。 Local government debt balance of 20.5 trillion in the first half of the year

By the end of June 2019, the balance of local government debt across the country was 20.5477 trillion yuan, within the limit approved by the National people's Congress. Of this total, the general debt was 11.8397 trillion yuan, the special debt was 8.708 trillion yuan, the government bond was 20.2326 trillion yuan, and the stock of government debt in the form of non-government bonds was 315.1 billion yuan.

3. The Ministry of Ecological Environment starts the second batch of on-site investigation of sewage discharge outlets around the Bohai Sea

On July 22, the Ministry of Ecological Environment held a meeting on the spot investigation and promotion of sewage discharge outlets in 8 cities around the Bohai Sea. The Ministry of Ecological Environment today launched the second batch of on-site investigation of sewage outlets into the sea in eight cities around Bohai Sea, including Yingkou, Panjin, Jinzhou, Huludao, Cangzhou, Binzhou, Dongying and Weifang. It will adopt the method of "inserting to the end" and, in conjunction with the local government, conduct a comprehensive inventory of all kinds of "vents" that discharge sewage to the Bohai Sea.

4. the scale of infrastructure projects approved by the NDRC exceeded 950 billion yuan during the year.

The reporter combed and found that nearly 40 infrastructure projects have been approved by the NDRC this year, with a total investment of more than 950 billion yuan. From the point of view of the type of projects, most of them are concentrated in urban tracks, airport expansion, coal mines, and other fields. Ma Qiang, deputy director of the basic Department of the National Development and Reform Commission, said that there is more room for transport infrastructure development in China, which is a key area for promoting effective investment.

5. investment in fixed assets in transportation totaled 1.37 trillion yuan in the first half of the year, an increase of 4.8 per cent over the same period last year

On July 23, the Ministry of Transport held a regular press conference. According to a spokesman for the Ministry of Transport and deputy director of the Policy Research Office, in the first half of this year, a total of 1.3698 trillion yuan was invested in railways, highways, water transportation, and civil aviation, an increase of 4.8 percent over the same period last year. In terms of passenger transport, the volume of commercial passenger traffic was 8.75 billion, down 1.8 per cent from the same period last year. In terms of freight, the volume of commercial freight was 24.58 billion tons, an increase of 5.9 percent over the same period last year, of which 27.8 billion pieces of express delivery business was completed, an increase of 26 per cent. 135000 km of rural roads were rebuilt and 67.7 per cent of the target task of 200000 km was completed.

6. The load of the North China Power Grid of the National Network has reached an all-time High

Since July, the high temperature and high humidity weather has continued to appear in North China, and the load of North China Power Grid has continued to climb. As of July 22, the load of North China Power Grid reached 233.4 million kilowatts, an increase of 1.5 percent over the same period last year. The load of Shandong Power Grid reached 83.12 million kilowatts, an increase of 8.7 percent over the same period last year, reaching an all-time high; the load of Beijing-Tianjin-Tang Power Grid reached 60.05 million kilowatts, reaching 92.6 percent of the largest load in history; and the load of Hebei South Power Network reached 36.38 million kilowatts, 99.5 percent of the largest load in history, a new high in the year. According to the meteorological department forecast, the recent high temperature and high humidity weather in North China will continue, and the subsequent power grid load may reach a new high.

7. Vice President of China Rail Exchange Association: China Urban Rail Investment scale of more than 400 billion yuan per year is expected to continue

Zhou Xiaoqin, executive vice president of the China Urban Rail Transit Association, pointed out at the forum that China's urban rail transit has now entered a stage of high and stable development. The national scale of more than 6000 kilometers under construction, the investment scale of 400 billion-500 billion yuan per year, and the scale of completion and operation of more than 500 billion kilometers per year will continue for a period of time.

[summary of major events]

1. Interpretation of Economic data in the first half of the year: sustained release of domestic demand potential

After many years of transformation, the pattern of China's economic development has undergone significant and profound changes, and domestic demand, especially consumption, has become the main driving force of economic growth. This judgment is once again confirmed by the data on economic operation in the first half of this year. At the present stage, the potential of investment demand in China is still huge, and while the investment growth rate is stabilizing, what is more worthy of attention is that its structure shows a trend of continuous optimization.

2. Shandong issues policies to promote high-speed rail construction to support social capital investment

In order to promote the rapid and healthy development of high-speed railway (including inter-city railway) in the whole province, we should speed up the construction of modern high-speed railway network covering the whole province. Recently, the General Office of the Shandong Provincial people's Government issued the "opinions on promoting the Construction of High-speed Railway." The opinion clearly proposes to support social capital to participate in the construction of high-speed railway in the province through investment in provincial railway development fund, PPP (cooperation between government and social capital), equity investment and so on. We will actively strive for financial institutions to provide medium-and long-term preferential loans for the construction of high-speed railways. We will increase government investment and raise 100 billion yuan of provincial railway development funds.

3. Enlarged meeting of the standing Committee of the Hebei Provincial Party Committee: vigorously developing strategic emerging industries and unswervingly controlling pollution with an iron hand

On the afternoon of the 19th, the standing Committee of the Hebei Provincial CPC Committee held an expanded meeting. The meeting stressed: it is necessary to do a good job in economic work in the second half of the year, vigorously develop strategic emerging industries, modern service industries, and urban agriculture, unswervingly push into production capacity, adjust structure, and promote transformation, effectively guard against and defuse major risks, step up efforts to grasp large and good projects, vigorously develop county economy, private economy, urban economy, and coastal economy, unswervingly control pollution with an iron hand, and thoroughly implement 20 projects for the hearts of the people. We will make every effort to win the battle to get rid of poverty and step up the reform of "releasing management and clothing." The meeting examined and adopted the "implementation Plan for the overall Utilization and Protection of Water Resources in Hebei Province," emphasizing the need to persist in tackling both the symptoms and the root causes, comprehensive management, and the combination of water storage, diversion, water saving, and water control.

4. strict control measures for the prevention and control of air pollution in Tangshan in late July

According to the letter of the Provincial Environmental Emergency and heavy pollution Weather early warning Center on recent Air quality Prediction and Control suggestions, in order to effectively deal with the adverse diffusion weather in late July, on the basis of strictly implementing the "enhanced Control Plan for the Prevention and Control of Air pollution in July", on the premise of ensuring production safety and flood season safety, stricter control measures were implemented from 00: 00 on 21 July to 24:00 on 31 July. From 00: 00 on July 26 to 24:00 on July 28, the equipment of sintering machines (shaft furnaces) in iron and steel enterprises in the city was completely shut down, and the blast furnace was braised. Does not include: Shougang relocation, coastal port area of Shougang Jingtang, Wenfeng Iron and Steel, Tangshan Iron and Steel medium and heavy plate, Delong Iron and Steel, vertical and horizontal steel, Tianzhu Iron and Steel, Huaxi Iron and Steel, Guoyi Special Steel.

5. Tianjin comprehensively strengthens the Action of "Blue Sky Mission"

It has been learned from the Municipal Bureau of Ecological Environment that from now until August 31, on the basis of the continuous implementation of the "Blue Sky Mission" in the summer of 2019, the city will further pay close attention to 13 strengthening measures in 4 aspects and strive to achieve a significant improvement in air quality as soon as possible. We will further strengthen pollution control in key industrial sectors such as iron and steel, electric power, petrochemical, glass, cement, garbage incineration and power generation, strengthen the control of key industrial agglomeration areas, and strengthen the supervision of VOCs emission enterprises; strictly do a good job in the prevention and control of dust pollution, strengthen scientific protection, and strengthen the control of mobile source pollution such as motor vehicles and non-road mobile machinery.

6. Langfang withdrew from the last iron and steel enterprise this year

According to reports, Langfang the original four iron and steel enterprises, the overall level of equipment, technical and technological level is high, not within the scope of elimination prescribed by the state. However, Langfang resolutely implemented the requirements of the provincial party committee and provincial government to build a "steel-free city." over the past two years, it has overcome difficulties and challenges and explored and applied the market-oriented model of "government promotion, enterprise main body, market operation, and policy support." the overall withdrawal of three iron and steel enterprises, the resolution of production capacity of 16.52 million tons, the placement of more than 18000 workers, the realization of production safety "zero accident", the placement of "zero petition". This year, Langfang City will withdraw from the last iron and steel enterprise as a whole, realizing the "zero" of steel production capacity in the whole city.

7. These iron and steel and coking enterprises in Linfen City will stop production and withdraw from production.

Recently, Linfen City held a "one city three areas" regional restrictions on iron and steel, coking enterprises to stop production withdrawal from the special report meeting. At the meeting, the responsible persons of Linfen Economic Development Zone, Yaodu District, Xiangfen County and Hongdong County respectively reported the specific situation of the suspension of production and withdrawal of enterprises under their jurisdiction, such as Linfen Jingwei Branch, Dongfang Hengli Precision casting Co., Ltd. (steel part), Shuntai Industrial Co., Ltd., Shanxi Sanwei Reed Coking Co., Ltd., Shanxi Yuanzhong Coking Co., Ltd.

Vale (Vale) releases second quarter production and sales report 2019

On July 22, Vale (Vale) released its production and sales report for the second quarter of 2019. Iron ore production totaled 64.06 million tons in the second quarter, down 12 per cent from a month earlier and 34 per cent from a year earlier, mainly due to the Brumadinho tailing dam accident and bad weather in the northern mining area in April. Iron ore production in the first half of the year was 137 million tons, down 23.4 percent from a year earlier; total sales of Vale iron ore and pellets in the second quarter were 70.79 million tons, up 4.5 percent from a month earlier and down 18.2 percent from a year earlier. Total sales in the first half were 170 million tons, down 18.9 per cent from a year earlier. With the resumption of production at the Brucutu mine, Vale reconfirmed that its total target sales for iron ore and pellets were in the 3.07-332 million ton range, and said the target sales volume had been raised from the previous lower limit to the intermediate range.

9. investment in fixed assets in transportation totaled 1.37 trillion yuan in the first half of the year, an increase of 4.8 per cent over the same period last year

On July 23, the Ministry of Transport held a regular press conference. According to a spokesman for the Ministry of Transport and deputy director of the Policy Research Office, in the first half of this year, a total of 1.3698 trillion yuan was invested in railways, highways, water transportation, and civil aviation, an increase of 4.8 percent over the same period last year. In terms of passenger transport, the volume of commercial passenger traffic was 8.75 billion, down 1.8 per cent from the same period last year. In terms of freight, the volume of commercial freight was 24.58 billion tons, an increase of 5.9 percent over the same period last year, of which 27.8 billion pieces of express delivery business was completed, an increase of 26 per cent. 135000 km of rural roads were rebuilt and 67.7 per cent of the target task of 200000 km was completed.

10. The sixth Plenary session of the 13th Jiangsu Provincial CPC Committee was held to discuss the "outline of Regional Integration Development Plan for the Yangtze River Delta" in Jiangsu Province.

The plenum pointed out: it is necessary to seize strategic opportunities, shoulder political responsibilities, and carry out the overall planning and integration of the three major national strategies. It is necessary to focus on promoting the "six integration" of industrial innovation integration, infrastructure integration, regional market integration, green development integration, public service integration, and provincial global integration. Efforts should be made to realize the integration of commonness and individuality, the dialectical unity of cooperation and competition, and the complementary development of agglomeration and radiation.

11. Beijing, Tianjin and Hebei jointly attack to control illegal overloading

It has been learned from the Tianjin Municipal Transportation Commission that in order to further give full play to the role of the Beijing-Tianjin-Hebei joint super-control mechanism and improve the level of regional road traffic safety, Tianjin has led the Beijing Municipality and Hebei Provincial Super League departments to launch a three-month special campaign to jointly manage the 100-day battle. At the same time, on the basis of establishing the law enforcement mechanism of joint super-control in "Tongwu corridor" area, Tianjin Binhai New area, Jizhou District and Ninghe District have also signed the joint super-control work agreement with the adjacent areas of Beijing and Hebei Province.

12. construction of a number of key projects in Xiongan New District

Xiongan New District steadily promoted the construction of key projects as scheduled, and by the end of June, a number of key projects such as infrastructure and ecological and environmental protection had been launched. The person in charge of the Reform and Development Bureau of Xiongan New District said that at present, 20 key construction projects, such as the South Juma River Flood Control Project (Rongcheng Section), Rongxi concrete mixing Station, and internal construction channels in Rongdong District, have been organized into construction, and another 31 projects have entered the preliminary design and construction drawing design stage. This year, a total of 67 established key projects and 20 general projects in the supporting services and enterprise categories will be promoted.

13. China Coal Association: it is more difficult to ensure the Emergency supply of Coal in China

Liang Jiakun, party committee secretary of the China Coal Industry Association, said at the 2019 Summer National Coal Trade Fair on the 23rd that with the closure and withdrawal of backward production capacity, the focus of coal production has accelerated to the west, and the shortage of regional and temporal coal supply has become more prominent. It is more difficult to ensure the emergency supply of coal in the whole country.

14. the ex-factory price of steel in Maanshan City showed a rising trend in the first half of the year.

Price monitoring data show that in late June, Maanshan City, the main basic industrial raw materials (Maanshan Iron and Steel) five varieties of steel ex-factory prices compared with the beginning of the year, compared with late June last year, there was a general decline. In late June, the overall average price of the five varieties of steel at Maanshan Iron and Steel Co., Ltd. was 4086 yuan / ton, up 100 yuan / ton, or 2.51%, compared with the overall average price of 3986 yuan / ton at the beginning of this year. Compared with the overall average price of 4370 yuan / ton in late June last year, down 284yuan / ton, down 6.50 per cent.

15. Shandong: 46.7 billion yuan in new tax cuts and fees from January to May this year

According to the Shandong Provincial Department of Finance, Shandong achieved a new tax cut of 46.7 billion yuan from January to May this year, and the effect of tax reduction has begun to appear. According to a preliminary estimate, Shandong has implemented various tax reduction and fee reduction measures, and the scale of the burden reduction is expected to reach more than 138 billion yuan for the whole year. According to the survey, 95 percent of enterprises in Shandong expect production and operation to be "good" or "normal" in the second quarter, and 84.3 percent expect fixed asset investment to "increase" or "flat" in the second quarter compared with the same period last year. The effect of tax reduction will be more obvious in the second half of the year, and the burden on enterprises will be further reduced.

16. establishment of the first large coking coal storage and distribution base in China

Shanxi Coking Coal Group, Shanxi Xinmin Energy Investment Group, Guangxi Shenglong Metallurgical Co., Ltd. and other six enterprises jointly established Shanjiao sales Rizhao Co., Ltd., which marks the establishment of China's first large coking coal storage and distribution base. According to Wang Maosheng, chairman of Shanxi Coking Coal Group, the base, with a total investment of 1 billion yuan, will store and sell 10 million tons of coking coal annually based on Rizhao Port in Shandong Province. it is mainly aimed at iron and steel enterprises around Shandong Province, Northeast China and coastal areas along the Yangtze River in East China, and is expected to be completed by the end of 2020.

17. Ministry of Ecological Environment: class A enterprises to achieve ultra-low emissions will not stop limiting production this winter

Liu Youbin, spokesman for the Ministry of Ecology and Environment, revealed at a regular news conference on the 26th that the Ministry of Ecology and Environment plans to classify enterprises that have reached ultra-low emissions as Grade A in an all-round way. Such enterprises do not need to take emission reduction measures such as production restrictions or suspensions when dealing with heavy pollution this winter.

 

 

 

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