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[SMM Black Daily Review] the wind blows the fairy and floats like a neon feather dance
Apr 7,2020 18:30CST
translation
Source:SMM
The content below was translated by Tencent automatically for reference.

(7 April)

< 1 > in terms of epidemic situation.

The new situation of domestic epidemic situation: 983 cumulative cases were imported and 1033 asymptomatic infection.

China Government Network: recently, the number of confirmed cases of entry at land ports in China has exceeded the number of confirmed cases at air ports. The party committees and governments of all border provinces (autonomous regions) should bear overall responsibility for preventing the cross-border import of the epidemic situation in their respective regions, consolidate their territorial prevention and control responsibilities layer by layer, and be prepared to deal with plans and quarantine facilities, places of observation, protective materials, and medical personnel, and adopt classified policies and accurate prevention and control. It is necessary to adhere to the combination of emergency disposal with normal prevention and control, restore production order by division and classification, and effectively and orderly promote the resumption of production and speed up and expand the surface. Not only to prevent carelessness, but also to prevent a "one-size-fits-all."

Zhang Wenhong: the sharp increase in the number of cases around the world warns us that the world should unite to help countries with insufficient medical resources to fight the epidemic. The global epidemic depends on the country with the worst control, not on which country controls the best and earliest. As long as there is one country in the world that is not under control, the virus "will spread to the world". The epidemic is likely to be followed by wave after wave, and there will be a protracted war.

Overseas outbreak: > 1.267 million people.

Epidemic situation in Europe and the United States:

The first square array of the United States: the way of heaven is a good reincarnation, who has been spared by heaven! The United States gives priority, with 368169 confirmed cases and 10986 deaths.

Europe: Italy, Germany, Spain curve flattening characteristics are obvious, inflection point is expected!

The second square array: Italy (> 13w), Spain (> 13w), Germany (> 10w), France (nearly 10w), England (> 5w).

The third square: Switzerland, the Netherlands, Belgium, Austria, Portugal (1w / 3w).

Related countries: Iran (> 6w), Pakistan (12232), Australian kangaroo (5895), Canada (16666), Malaysia (3793), South Africa (1686), India (4778), Philippines (3660), Turkey (30217).

< 2 > current playback:

1. Spot: Qingming season overall pressure. Today, the rebar market fluctuates slightly, with a slight rebound of 10 yuan / ton in East China and North China, and a slight drop of 10 yuan / ton in the southwest and central China market.

Overall trading volume: there are beautiful women in the north, quite good.

The market mentality is cautious and optimistic.

Tangshan area billet to 3010 yuan / ton.

Raw material end:

Scrap prices fell sharply by 100 yuan and 150 yuan per ton during the festival.

The price of coke fell 50 yuan per ton. The fifth round of lifting and landing, a cumulative drop of 250 yuan / ton.

Imports of main coking coal continued to weaken.

Iron ore port spot market prices fell steadily, down 10% 15 yuan / ton. The transaction of PB powder in Shandong area is about 625-630 yuan / ton, and that of PB powder in Tangshan area is about 635 yuan / ton. The overall deal is fine.

2. Futures:

RB2010 main contract: a significant increase in positions between 3191 and 3244 within the day, ending at 3206.

HC2010 main contract: a small increase in positions between 3035 and 3081 within the day, ending at 3063.

Iron ore i2009 main contract: within the day in 557 to 573 significantly increased position horizontal shock, the end of 569.5.

Coke J2009 main contract: within the day in 1625.5 to 1656.5 between the rebound, the end of the 1645.

Coking coal JM2009 main contract: within the day between 1106 and 1073 to increase positions downward, the end of 1088.

Forecast of the current period of the Ming Dynasty

1. Spot: strong shock.

2. Futures:

RB2010 main contract: concussion between 3180 and 3290.

HC2010 main contract: concussion between 3030 and 3150.

I2009 main contract: concussion between 560 and 585.

J2009 main contract: concussion between 1620 and 1700.

JM2009 main contract: concussion between 1070 and 1130.

3. Spot operation tip: see heart language.

Futures Tips:

Thread, hot coil, coke tomorrow range more trading. Iron ore trend empty single high intervention, intra-day short-term range of high selling and low suction. Coking coal food tasteless wait-and-see or within the range of short trading.

RB2010 main force contract: pressure level 3270.

HC2010 main force contract: pressure level 3150.

I2009 main contract: pressure level 585.

J2009 main force contract: pressure level 1680.

 

JM2005 main force contract: pressure level 1150.

< IV > Information and heart language.

1. The central bank decided to reduce the deposit reserve ratio by 1 percentage point for rural credit cooperatives, rural commercial banks, rural cooperative banks, rural banks and urban commercial banks operating only in provincial administrative areas, and to implement them twice on April 15 and May 15, with a reduction of 0.5 percentage points each time, releasing a total of about 400 billion yuan of long-term funds. At the same time, it was decided to cut the interest rate on excess reserves held by financial institutions with the central bank from 0.72% to 0.35% from April 7.

2. Central bank: in the first quarter, China's bond market issued 12 trillion yuan of bonds, an increase of 14 percent over the same period last year, and the balance was 103 trillion yuan, an increase of 4 percent over the end of last year. China's bond market continues to develop steadily, providing strong support for epidemic prevention and control and economic and social development.

Note: overseas epidemic situation worsened, domestic counter-cyclical regulation significantly accelerated!

3. The OPEC+ meeting, with twists and turns, was officially postponed to April 9. It is reported that if Russia reaches any new agreement with other major oil producers, Russia will set a target of cutting production by 1 million barrels per day, provided that the United States also joins in the reduction. Saudi Arabia will release the official price of May crude oil on April 10, sources said. The Iraqi oil chief is optimistic about an agreement at the OPEC + meeting, and any new oil deal will need the support of major OPEC + producers such as the United States, Canada and Norway.

4. [Ministry of Housing and Construction: the national resumption rate of housing construction and municipal infrastructure projects exceeds 85 per cent] as of April 1, a total of 186600 housing construction and municipal infrastructure projects were under construction, of which 158700 had resumed work, with a resumption rate of 85.06 per cent. Among them, the resumption rate of 16 provinces (autonomous regions and municipalities) reached more than 90 per cent (inclusive). In addition, the resumption rate of sales offices across the country reached 92.73%. The Ministry of Housing and Construction said that it is necessary to actively expand effective investment and consumption in housing and urban and rural construction. We will do a good job in the transformation of shantytowns, the construction of policy-oriented rental housing, and the transformation of old residential areas in cities and towns, further improve support policies, and speed up the commencement and resumption of reconstruction projects.

5. Price adjustment of Sangang: the price of all kinds of building materials will not be adjusted from 00:00 on April 06, 2020, and the guide price will be implemented from 00:00 on April 6, 2020. 3700 / high line 3750 / disc screw 3850, the discount rate will not be adjusted.

6. According to SMM tracking data, a total of 86 ships arrived at China's main ports from 3.29 to 4.4, with an estimated arrival volume of 13.43 million tons, an increase of 2.43 million tons over the previous period and an increase of 1.35 million tons over the same period last year. During the period, the outbound port of Australia increased by 1.09 million tons to 17.41 million tons, an increase of 4.12 million tons over the same period last year, while the departure of Brazil increased by 1.01 million tons to 5.62 million tons, an increase of 3.3 million tons over the same period last year, which was mainly caused by heavy rainfall in Brazil and Vale dam break. In this period, the arrival of iron ore to Hong Kong and the departure of Macao and Pakistan as a whole are still in a state of continued recovery, the supply end of iron ore is expected to continue to be loose, and iron ore prices are under pressure. [SMM Steel]

7. Peep at scrap prices to verify supply-side changes.

The price of scrap steel fell sharply during the Qingming Festival. The main logic is:

First, the recent increase in the number of maintenance and shutdown of long-process steel mills.

Second, South Korea, CIS, Turkey and other low-cost import hot coil, medium plate, cold rolled plate impact, some long-process steel plant conditions limit molten iron can not be converted to building materials, triggering a significant reduction in the proportion of scrap steel.

Third, although the price of scrap steel has dropped, the cost or cost performance ratio of scrap steel is still higher than that of molten iron.

Fourth, the mid-term decline of iron ore prices has been gradually recognized by the late market.

Nine words persuade the lost, a "epidemic" awakens the dreamer.

The story of demand convergence affected by the epidemic is better than the story of supply convergence! The steel mill is more than traditional (normal ton steel 50 60kg) to add scrap proportion is willing to lose.

Fifth, the peak of phased procurement of independent electric arc furnace steel plants has just passed, but many areas such as North China, central and western steel mills scrap acquisition difficulties have gradually emerged, short-term scrap prices have stopped falling signals.

In a word, at present, the output of the supply side long process and the independent electric arc furnace fluctuates one after another, and the overall fluctuation is limited.

8. Der Spiegel is a high judge of supply and demand.

The main results are as follows: (1) the fluctuation on the supply side is limited.

(2) demand side:

The wind blows the fairy contrast flutters, like the neon feather dance!

Even though it rains during the Qingming Festival! At present, the construction of the tent is more common, the short-term impact is limited! Demand return period (recent transaction volume data continue to support), the real estate industry has basically returned to normal, new infrastructure demand (mainly old infrastructure) rushing on the road. No, no.

(3) the absolute low price fully reflects the high inventory.

 

To sum up, the current electric furnace plant ton steel gross profit (about 200 yuan) to equalize the long process steel plant profit, cost support further downward caused market concern. The author believes that do not worry about the ancients: the essence of price is determined by the relationship between supply and demand, since there is no essential change or even convergence probability on the supply side, and the return period of demand is more deterministic. How about moaning without illness?!

Spot operation suggestion: high sell low suction rolling into the inventory increase stage.

9. The forward-looking deduction of iron ore prices remains unchanged.

Overseas epidemic situation, the impact on iron ore demand is greater than the supply side impact gradually realized. No, no. Overseas steel mills have been walking on the road to reduce production. No, no. Overseas shipments not only increased, but also significantly increased the proportion of shipments in China, 09 contract resistance fell, only high base spread, spot prices warm boiled wow, the target price of $50 right.

10. Coke prices dropped in the fifth round of basic landing, coke enterprises have been on the verge of loss, but forced to stop production has been superimposed on the road Shanxi, Shandong direction to production capacity. The bottom of the price is rammed, the price falls somewhat, after that, it will be a disaster.

11. Pay attention to the OPEC production reduction meeting.

12. Focus on overseas outbreaks.

 

< 5 > prospects for the steel market in the second quarter.

I. Prediction of macro prospects at home and abroad

Domestic macro vision:

First, the epidemic gentleman mistakenly hit the Yellow Crane Tower, counter-cyclical adjustment accelerated.

During the period from the outbreak of the Yellow Crane Tower to the pre-outbreak of the overseas epidemic, the domestic counter-cyclical regulatory factors increased and accelerated, mainly including and not limited to the new infrastructure, tax reduction, reduction of accuracy and other policy incentives to counter epidemic injury and the "six stable" target tasks, even after the "two sessions", because of the overseas epidemic outbreak "six stable" national policy to a certain extent, there is a correction probability, but considering the role of inertia and lag, the second quarter can and must be reflected. That is, strong expectations will be fulfilled in the second quarter.

Second, there is uncertainty in China's monetary policy in the later period.

In order to rescue the current liquidity crisis in the market, and in response to possible economic turmoil, the Fed has launched an unlimited, bottomless QE monetary easing stimulus. There is no doubt that all non-US countries have paid for it, and no matter what measures they take, imported inflation is doomed.

In the short term, stimulated by the Fed's unlimited easing program, suspended the liquidity crisis, calmed the market sentiment is effective, U. S. stocks rebounded sharply.

In the medium term, the main contradiction of the US Emperor is the epidemic situation. At the beginning of the epidemic, there is uncertainty about the extent to which the epidemic has deteriorated, and this year's recession is deterministic. The recession began with an epidemic. Consumers had to spend less because of the epidemic, and producers had to shut down because of the epidemic. Enterprises can not produce normally because of the impact of the epidemic, at the same time, they have to face a sharp reduction in orders brought about by shrinking consumption in the future. Many enterprises will have to face the risk of bankruptcy because of the cash flow crisis caused by the sharp decline in income, and the resulting rising unemployment rate will aggravate the economic recession. These economic activities, the Fed injection of liquidity to promote the role is very limited.

Bet all the money on the bottom of the deposit box on the gambling epidemic! Premature excessive consumption of policy space, what if the epidemic gets out of control? Can the trick of sucking blood and non-American people's sweat in 2008 come true again? Let's see.

In the long run, the great change in the world pattern is deterministic, but who is in charge of uncertainty!

Looking at the great China, China's monetary policy is facing a big test again! Is it possible to follow in the footsteps of the non-US developed economies and follow the old path of 2008? Or are you sure to move on? Or is the "six stable national policy" adjusted to "protect finance and employment"?. No, no. Test the wisdom of decision makers again! In short, hard wounds can not escape! After the "two sessions", the monetary policy of a great country is full of uncertainty, and the market is now strongly expected to cut interest rates in April. The G20 meeting delivered 35 trillion yuan in monetary stimulus to deal with the epidemic and hedge against the global recession! Listen to his words and observe his deeds. The author foolishly believes that if the water release of Chinese currency can stop in the direction of world epidemic control and "Belt and Road", that is, to implement a community with a shared future for mankind, and to export inflation to the United States. It's not beautiful! The Federal Reserve needs China to prepare for the policy response to the imported inflation in non-American countries, especially in developing countries, regardless of the consequences of the secondary economic and social disasters brought about by the continuous development of the epidemic.

In short, benevolence sees benevolence and wisdom sees wisdom.

Third: the epidemic sweeps the west wind, how can the secondary disaster endure.

The outbreak period of the overseas epidemic situation, especially the United States Emperor has the tendency to catch up from behind, although the medical level is not moved, but the political and economic interests override the rest of the world.

Above, there is no suspense on the European and American epidemic Cup champion podium! For the good is the happiest, for the evil can not escape. A long way of good reincarnation, the vast sky spared who! Coronavirus is the common enemy of mankind at present, the practice of a community with a shared future for mankind is the truth, and the control of the epidemic bean base is the essential work of the United States, and it is also the concrete practice of being responsible to mankind. The United States not only does not face up to the main contradiction of the epidemic bean base, but gives priority to opening up an unlimited easing policy! If you hurt an "enemy" by 1000, you will injure yourself by 800. The Great Recession and the Great Depression are doomed! Similarly, overseas outbreaks have caused secondary disasters in China. There is no doubt that imports and exports shrank greatly in the second and third quarters.

Fourth: the story of farmers and snakes should not be forgotten.

During the period of the Yellow Crane Tower wearing a cover to fight the epidemic, the United States Emperor etiquette and shame, four-dimensional atelectasis. Many senior officials and dignitaries of the US Imperial Government are afraid that China will not be disorderly and gloat, hoping that the epidemic will deal a fatal blow to China's economy and geopolitics, constantly attack and stigmatize the Chinese virus, and engage in political "epidemic poison." through the so-called "Taipei Act," the Senate and House of Representatives have colluded with Taiwan's Min jin, colluded, grossly interfered in China's internal affairs and continued to escalate, and the media unscrupulously propagated false information by using a powerful network platform. Militarily, show off your muscles and make threats on the doorstep of China. No, no. It's hard to tell!

After the epidemic, the US Emperor further contained Greater China in an all-round way, and it was by no means alarmist! Chairman Mao's quotation: the United States imperialism will not die, we must always raise the police!

II. Prediction of the fundamentals of the Iron and Steel Industry

1. Der Spiegel is a high judge of supply and demand.

Supply side.

At present, the profit of long-process tonnage steel is 300-400, and some of the original long-process shutdown and maintenance are gradually resuming, even if the steel enterprises shut down by the epidemic in Hubei Province will resume production no later than mid-April. Independent electric arc furnace steel mills lose less than 100 yuan or even some of the steel enterprises that enjoy tax rebates and enjoy local government subsidies due to the downward movement of scrap prices. No, no. It can be determined that production in April has become normal.

Quantitative valuation: 6800 / 700 = 75 million tons

The long process output is 7.11 × 1.1 / 80 / 92 / 6.800, that is, 68 million tons.

The capacity utilization rate of independent electric arc furnace is 70%, 7 million tons.

The demand side.

Throughout the table trading volume in late March and eliminate speculative false demand, and combined with including but not limited to cement prices, concrete mixing stations, pipe pile demand, PC steel bar prices verify each other, and then peep at the start of real estate and steel net export trade considerations. The return period of qualitative demand in April is about 95% of the normal.

Quantitative valuation: 6966 tons 350 = 73.16 million tons

Domestic apparent demand: 7333mm 0.956966 (ten thousand tons)

Net exports are estimated at 3.5 million tons.

The relationship between supply and demand is broadly consistent.

2. Solution of towering floating Cloud in inventory

Seek proof according to the inertia of thinking:

The total inventory of five varieties is 35 million tons, and the total stock of rebar is 19.5 million tons. Even if the data in the table are objective and practical, the maximum inflection point of perennial inventory is still higher than about 10 million tons. Absolute high section of the inventory to the perennial inflection point value at least a month, steel price rebound road is a long way to go!

Reverse thinking:

One is: precisely because the inventory is towering and floating clouds, there is now "land price" steel.

The second is: the steel mill price is determined, with the time dimension for the space dimension.

Third: the so-called inventory towering clouds, just used to the concept, get used to it! Inventory is only a static index of the relationship between supply and demand, and the essence of price is determined by the relationship between supply and demand.

3. The epidemic caused the absence of demand, there is no doubt to rush to make up for classes.

4. There is a high probability of retrograde strength along the Belt and Road.

 

To sum up, steel prices in April are still negative walking, the upper and lower driving forces are limited, in May into the ready stage, June is expected!

Note: business trip tomorrow, no tweets.

 

Details consultant Lu Qingping 021-51595781

(disclaimer: this article is exclusively produced and published by the author under the exclusive authorization of SMM Iron and Steel, and may not be reproduced without authorization)

 

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