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[SMM current Daily Review] Wan Mu Chun in front of the diseased tree
Apr 10,2020 20:51CST
translation
Source:SMM
The content below was translated by Tencent automatically for reference.

(10 April)

< 1 > in terms of epidemic situation.

Zhong Nanshan said the new crown pneumonia may exist for a long time. April 10-Today, Academician Zhong Nanshan of the Chinese Academy of Engineering and South Korean epidemic prevention experts online exchange experience in prevention and control between China and South Korea. "it is impossible to eradicate the disease completely," Zhong said. "in the future, it will be possible to spread for a long time, without causing a large-scale outbreak."

The new situation of domestic epidemic situation: 1141 cumulative cases were imported and 1097 asymptomatic infections.

Overseas outbreak: > 1.53 million people.

Epidemic situation in Europe and the United States:

The first square array, the United States, gives priority to the United States, with more than 468000 confirmed cases and 16697 deaths.

Europe:

The second square array: Italy (> 14.3w), Spain (> 15.7w), Germany (> 11.8w), France (> 11.8w), England (> 6.5w).

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

Asia and Stone Associates:

Iran (> 6.6w), Japan (5556), Brazil (18176), Australian kangaroo (6203), Canada (20765), Malaysia (4346), Indonesia (3512), South Africa (1934), India (6771), Philippines (4195), Turkey (42282), Israel (10095).

 

< 2 > current playback:

1. Spot aspect: the rebound continues, an increase of 10% 30 yuan / ton.

Volume: OK.

The market mentality is OK.

Tangshan area billet upward 10 to 3030 yuan / ton.

Raw material end:

Scrap prices rebounded in some areas.

Coke price stability: steel mill available inventory days increased, coke enterprise inventory decreased.

The price of main coking coal is stable: Port inventory fell to about 5.5 million tons. The purchasing will of coke enterprises is weakened and the price is under pressure.

For more information on the spot market price of iron ore ports, see SMM Nonferrous Network report:

This even iron partial strong shock, the early market spot market quotation appears 5-10 yuan / ton or so increases. Some businesses are willing to raise prices, steel mills more exploratory enquiries, some on-demand procurement, the overall transaction is still OK. As of April 10, inventories at 35 iron ore ports stood at 108.43 million tons, an increase of 1.57 million tons over the previous week and a decrease of 23.5 million tons from the same period last year. The volume of port closures on Sunday was down 9000 tons from the previous week to 2.725 million tons. Iron ore arrivals from major domestic ports tracked by SMM and AUB shipments have increased in the past two weeks, while the pace of port dredging has slowed, leading to a small increase in port inventories. From the recent departure situation of Macao and Pakistan, it is expected that the increment of ships in the near future is still expected, and most steel mills in the port area adopt the inventory reduction strategy, the current procurement frequency is low, therefore, it is difficult to see a significant increase in the short-term opening of the port. With the expected increase in iron ore arrival, port inventory may continue to increase in the later stage.

2. Futures:

RB2010 main contract: continued strong rebound between 3298 and 3376 during the day, ending at 3373.

 

HC2010 main contract: continued strong rebound between 3135 and 3210 during the day, ending at 3209.

Iron ore i2009 main contract: within the day in 590 to 603 between the rebound continued, ending at 599.5.

Coke J2009 main contract: within the day between 1690 and 1730.5 continued a strong rebound, ending at 1730.

Coking coal JM2009 main contract: a strong rebound between 1099 and 1138 in the day, ending at 1131.

< 3 > current forecast for next week

1. Spot aspect: the center of gravity moves up, concussion moves forward.

2. Futures:

RB2010 main contract: concussion between 3270 and 3410.

HC2010 main contract: concussion between 3110 and 3280.

I2009 main contract: concussion between 580 and 620.

J2009 main contract: concussion between 1670 and 1780.

JM2009 main contract: concussion between 1080 and 1180.

3. Spot operation tips: high throw low suction rolling operation.

Futures trading tips:

Thread, hot coil: chase more cautious, within the range of callback cloth more.

Iron ore: the trend air meets the high intervention, the short-term range high altitude is much lower.

Coke: trading within the range is neutral.

Coking coal: the tasteless wait-and-see or short trading in the range.

Timely stop profit stop is a hard road.

RB2010 main contract: support level 3270, pressure level 3380.

HC2010 main contract: support level 3090, pressure level 3220.

I2009 main contract: support level 580, pressure level 613.

J2009 main contract: support level 1660, pressure level 1780.

JM2005 main force contract: pressure level 1150, 1180.

< IV > Information and heart language.

1. OPEC + issued a statement confirming a reduction of 10 million barrels per day from May 1, 2020 for a period of two months. Production will be reduced by 8 million barrels per day from July 2020 to December and 6 million barrels per day from January 2021 to April 2022. Affected by the news, crude oil futures prices fluctuated sharply. WTI crude fell $2.33, or 9.29%, to close at $22.76 a barrel, up more than 12% in the morning. Brent crude fell 4.14 per cent to close at $31.48 a barrel after hitting a daily high of $36.40.

Note: the OPEC meeting cut production by 10 million barrels per day in line with market expectations, but the United States and Mexico did not follow up. Focus on Friday's OPEC meeting.

2. [4.3 per cent year-on-year growth in CPI in March PPI down 1.5 per cent] China's CPI grew 4.3 per cent in March from a year earlier and is expected to grow 4.8 per cent, up from 5.2 per cent before. China's PPI fell 1.5 per cent in March from a year earlier and is expected to fall 1.1 per cent, up from 0.4 per cent.

3. [people's Bank of China: broad money (M2) money supply increased 10.1% at the end of March] the people's Bank of China: at the end of March, the balance of broad money (M2) was 208.09 trillion yuan, an increase of 10.1% over the same period last year. The growth rate was 1.3 and 1.5 percentage points higher than that at the end of last month and the same period last year, respectively. The balance of narrow money (M1) was 57.51 trillion yuan, up 5 percent from the same period last year, which was 0.2 and 0.4 percentage points higher than that at the end of last month and the same period last year, respectively, while the balance of money in circulation (M0) was 8.3 trillion yuan, an increase of 10.8 percent over the same period last year. Net cash investment in the first quarter was 583.3 billion yuan.

[China's new RMB loan in March is 2.85 trillion yuan] China increased its RMB loan by 2.85 trillion yuan in March, with an expected 1.8 trillion yuan, up from a previous value of 905.7 billion yuan.

4. Although the profits of independent electric arc furnace steel mills are even higher than those of long-process steel mills, their supply side expansion is not as good as reducing production due to the impact of overseas non-building materials. The overall supply side expansion is less than market expectations, in line with the author's forward-looking deduction to achieve: limited volatility and even the probability of convergence. On the demand side, demand is generally strong, that is, demand return period. In short, the driving force of the rebound still exists, only high inventory restricts the rebound space.

5. Iron ore: the recent increase in the volume of foreign mine traffic, arrival volume, the market is expected to continue to increase port inventory; overseas epidemic led to foreign steel mills and mine production reduction expected game under way. No, no. The author's mid-term point of view remains unchanged. Short-term capital mood fluctuates with the steel up and down.

6. Double coke aspect: before the steel mill profit has not gone to expand, the coke first round rise is difficult to realize, the short-term still in the interval shock. Coking coal although the port inventory hit a new low for the year, but subject to coke losses, short-term price pressure remains.

7. Focus on the inflection point of the epidemic in Europe, the China-EU trade boost in May is on its way. No, no. Pay attention to the United States epidemic bean base inventory, the author is still on the way for the base bank. The inflection point of market expectations disagrees. Pay more attention to India and Brazil.

Attached Zhou Xin Yu.

3. Sunrise interpretation of inventory data:

The total output of the five major varieties increased by 467700 tons to 9.83 million tons, of which the output of rebar increased by 201300 tons to 3.2551 million tons.

The total inventory of the five major varieties decreased by 1.8257 million tons to 31.8616 million tons, of which the total inventory of rebar fell by 1.185 million tons to 17.3255 million tons.

Steel mill inventory: five major varieties down 762600 tons to 9.449 million tons, rebar down 531400 tons to 5.2155 million tons.

Social warehouse inventory: five major varieties fell by 1.0631 million tons to 22.4126 million tons, rebar fell by 653600 tons to 12.11 million tons.

Interpretation:

(1) supply and demand increase at the same time, but the growth rate of demand is greater than that of supply.

(2) the destocking process continues and the inventory pressure is alleviated.

(3) the short-flow electric arc furnace steel plant is about to return to normal.

In general, it is more neutral.

4. The demand for rebar is strong and has returned to the same period! However, the overseas epidemic situation continues to worsen, the import of low-cost hot coils, cold rolled materials, plate impact is still on the road, the flow of hot metal to building materials is indisputable. Superimposed inventory is still high pressure to restrict the rebound space of rebar in April. The essence of the rebound in the main contract of steel has nothing to do with the spot, focusing on the near-month contract is the right way to spot.

5. With the rebound of steel prices, scrap prices are difficult to find, prices have stabilized and strong on the way. No, no.

After the fifth round of coke price reduction landed, the coking plant generally lost money. Although the coking plant is up, the steel mill is silent. But at least it shows that the characteristics of the bottom of the price is obvious, when the steel mill profit has not improved significantly, maintaining the interval shock is a high probability event!

The logic of iron ore remains unchanged: the medium-term pressure remains the same.

6. Pay attention to the inflection point of the epidemic in Europe, the United States epidemic bean base inventory rate!

7. Pay attention to the OPEC production reduction meeting.

Note: the author foolishly thinks that the rebound of the stock market in the United States is at the end of its strength, and the epidemic bean base is the hard core.

Attachments.

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 imperialist 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 the House of Representatives have colluded with the jin Party of the people of Taiwan, colluded, grossly interfered in China's internal affairs and continued to escalate, and the media unscrupulously publicized 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!

 

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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