In July, after a round of rebound, the rebar market price showed a downward trend of concussion in the last half of the year, so what is the trend of the rebar market in August is a hot spot in the field of steel circulation. In this regard, Liang Taigeng, general manager of Shanghai Hualei Enterprise Development Co., Ltd., believes that the market price of rebar in August still has the momentum of rebound, but we need to pay attention to the existing supply and demand variables.
Liang Taigeng makes an in-depth and comprehensive analysis from the two key points of supply and demand, which determine the trend of the rebar market in August. Of which:
First of all, environmental factors. Liang Taigeng said that the production restrictions in Hebei Province in the early period were slightly lower than expected, and in August, with the 70th anniversary of the founding of the people's Republic of China getting closer and closer, the local requirements for air quality will be further improved, and the environmental protection and production restrictions will be further strengthened. For example, following the issuance of the notice on stopping production of Iron and Steel Enterprises in the whole City on 23 June by the Tangshan Municipal Government of Hebei Province, on 8 July, Wu'an City, Hebei Province, issued the implementation Plan for differential Control and Control of Air pollution Prevention and Control in the third quarter of Wu'an Iron and Steel Coking cement Industry in 2019, requiring 14 iron and steel enterprises in Wu'an to implement the wrong peak shutdown policy during the period from 1 July to 31 August. In September, combined with the air quality of Wu'an City, a separate control scheme was determined. Not only in the Beijing-Tianjin-Hebei area, but also in Shandong, Shanxi, Shaanxi and Jiangsu areas, the intensity of environmental protection and production restriction will also be increased in the later period, so that the steel market supply, including rebar, will be reduced in the later stage, which is an important factor affecting the later rebar market supply.
Secondly, this is the price difference between the price of Puyou steel and the price of rebar. At present, the price of Puyou steel in some areas has been close to or even exceeded the price of rebar. In the early stage, the price of Puyou steel is more than 100 yuan / ton, which makes some steel enterprises that produce Puyou steel convert to rebar. With the recent oversupply of rebar market and the decline of price fluctuation, some steel enterprises have begun to turn to the production of Puyou Steel, resulting in a reduction in the supply of rebar market in some areas.
In addition, changes in the market price of iron and steel raw materials. Recently, iron ore, coke, scrap and other steel raw materials prices are high, especially iron ore prices continue to rise, all the way high. The price of imported iron ore once rose to more than 120 US dollars per ton, rising 5.50% in the first half of July from the end of last month and about 70% from the beginning of the year. The price of imported iron ore reached a five-year high, and its price rose far more than steel prices. In addition, coke prices rose, Shandong, Shanxi coke enterprises began to rise in an all-round way, up 100 yuan / ton, the second round of increase is in progress, steel raw material prices continue to rise, so that steel mills production costs continue to rise. Recently, due to the limited production of blast furnace in order to increase the proportion of scrap steel added by long-process enterprises, coupled with the lack of production of downstream industrial steel enterprises, the sharp reduction of shantytown reconstruction projects and the restriction of imported scrap steel this year, there has been a shortage of scrap resources and a sharp rise in scrap prices. In particular, the steel mills produced by electric furnace steel have entered the balance point of profit and loss, and some electric furnace plants have entered into losses. Once the loss increases in the later stage, the steel mill will automatically reduce production, which will directly affect the supply change of the thread steel market in the later stage.
Liang Taigeng believes that, in the short term, due to the same caliber statistics of the weekly output of rebar, it rose to about 3.8 million tons last week, again close to an all-time high, and it is very difficult to reach a new high in the later stage. Compared with the demand of the current period, the current output is in a state of oversupply, resulting in inventory accumulation. The elimination of backward production capacity and reduction of replacement capacity should be reduced, but the current actual production capacity is still on the large side, the actual output has reached an all-time high. This may be related to the fact that the actual volume ratio is larger than the nominal volume rate. Therefore, it is suggested that steel mills should maintain self-discipline to control the growth of output in order to reduce the demand for raw materials, especially iron ore, alleviate the shortage of iron ore supply, and ensure the stable and healthy development of iron and steel enterprises.
The first is the factor of weather change. This year, the rainy season in the southern region lasts for a long time and has heavy rainfall, which is about twice that of previous years. The rainfall in some areas is even greater, which seriously affects the construction progress of construction projects and has a greater impact on the market demand for rebar. However, with the end of the rainy season in the southern region, local construction projects return to normal construction, then the rebar market demand will gradually return to normal. The obvious sign is the month-on-month increase in the actual output and trading volume of each region in the last ten days or so.
In addition, there are changes in the operation of the real estate industry. Recently, the new construction area and the scale of construction in the real estate industry are still relatively large, real estate investment in some areas is still growing, and there are still more new projects. The demand for specifications 25, 28 and 32 has increased in recent weeks, indicating an increase in the construction area of the newly started foundation. In addition, the production and output of prefabricated parts in recent assembly construction projects are also increasing. With the management and control of trust funds of real estate enterprises, real estate enterprises are more active in starting the existing land projects and speeding up the construction progress, so as to achieve sales as soon as possible, so as to improve the capital turnover rate. this will inject power into the demand for rebar.
In addition, the investment in infrastructure and the start of construction changes. With the rapid issuance of local bonds in the second quarter, especially close to 900 billion in June, some funds will be released one after another in August, and local government finance and taxation will be in place by the end of July, thus easing the shortage of funds in June and July. Speed up the start of infrastructure projects and speed up the progress of construction. This year, the NDRC has approved nearly 40 infrastructure projects, with a total investment of more than 950 billion yuan. From the type of projects, most of them are concentrated in urban tracks, airport expansion, railways, highways, and other fields. For example, in the first half of the year, the Shanghai region signed a centralized contract for 202 landing projects, with a total investment of more than 190 billion yuan, and another 220 projects will be started in the second half of the year, with a total investment of about 200 billion yuan.
With the centralized construction of a large number of major infrastructure projects in various places, as well as the successive arrival of funds, in August, whether in the real estate industry or infrastructure projects, there will be a "start tide" and "rush tide". This will certainly increase the demand intensity of the rebar market in the later period.
Overall, the rebar market has momentum to rebound in August, but only if supply falls, inventories fall and demand rises, which is the key to determining rebound momentum, Mr. Liang said. Therefore, we also need to pay attention to several factors that affect the change of the market. These factors are mainly reflected in:
First, pay attention to the differentiation of regional supply situation. Environmental protection and production restriction is mainly concentrated in North China, so it has the greatest impact on the market supply in North China. At present, the regional price difference of rebar market price in South China, East China and North China is relatively small, which leads to the poor mobility of resources between regions. At present, because of the profit, especially the long process enterprises, the iron and steel enterprises in non-production areas are producing at full load, which will lead to the increase or decrease of the supply situation in different regions. In addition, the classification and control of environmental protection and production restrictions, the verification of illegal production capacity, the inspection of production safety and the high temperature power limit will affect the supply. Therefore, it is necessary to pay attention to the changes of the supply situation in each region, which leads to the inconsistency of the fluctuation range, trend and direction of the rebar market price in different regions and different periods.
Second, pay attention to the cost and the implementation of the new national standard. The cost push is likely to be an important factor in prices next, as the cost of steel raw materials has risen sharply this year, especially since the rise in imported mines has eaten into most of the profits of steel mills compared with previous years. The supporting effect of cost on steel price has appeared for the first time in 16 years and has been more obvious recently. In addition, due to the sharp rise in scrap market prices, the production cost of electric furnace steel has increased significantly, so there are still some steel enterprises in production according to the old technology and the old national standard, and their cost is lower than that according to the new national standard. In some areas, this part of the product resources still account for a certain proportion, the existence of this phenomenon is not conducive to fair competition between enterprises, at the same time, it is not consistent with the high-quality development of iron and steel enterprises. At present, the inspection of the implementation of the new national standards in some areas is only verified after it has been reported. The use of these steel will make the building safety risks, especially in the earthquake zone. The new national standard of rebar has been implemented since November 1 last year. It is suggested that the state departments should carry out a comprehensive inspection of the implementation of the new national standard.
Third, pay attention to the implementation of funds for construction steel enterprises in place. The trust funds of real estate enterprises are controlled in the early stage, and with the issuance of a large number of local debts, the shortage of funds in the relevant real estate industry and infrastructure projects has been alleviated. In the later stage, we should focus on the impact of the actual availability of funds on the demand for rebar.
Fourth, pay attention to the mutual influence of the futures market on the spot market. In the past few weeks, due to the rise of the main contract price in the futures market relative to the spot market price, which is conducive to the arbitrage operation of the futures arbitrage management company to buy spot resources and sell futures, thus making the social inventory resources rise rapidly in some areas, especially in Hangzhou market, this phenomenon is particularly obvious. This part of the current arbitrage resources in a certain period of time lock and unlock the impact of the market supply, so that the market price fluctuations increase, so it should attract special attention.
24 July 2019