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[SMM issue current Daily Review] Shang Nu does not know the hatred of national subjugation, but still sings across the river.
Apr 21,2020 19:31CST
The content below was translated by Tencent automatically for reference.

(21 April)

< 1 > in terms of epidemic situation.

Domestic epidemic situation: a total of 1587 imported cases, asymptomatic infection 992.

Overseas epidemic: > 2.415 million / 166563 deaths.

Epidemic situation in Europe and the United States:

The first square array of the United States: more than 792000 confirmed cases, 42518 deaths, crude oil, epidemic bean base inventory, death toll practice "God-man" old special United States priority!

Europe: Germany, Italy, France and Spain continue to improve. Britain repeated, Russia in the outbreak stage.

The second square array (diagnosis / death).

Italy (> 181000 / 24114), Spain (> 204000 / 20852), France (> 156000 / 20292), United Kingdom (> 125000 / 16550), Germany (> 14.7 4862).

The third square array (160000): Russia (> 52000), Belgium (> 39000), Netherlands (> 33000), Portugal (> 20), Ireland (> 15000), Switzerland (> 27000), Sweden (> 14700), Austria (> 1.48).

Asian and stone related countries: kangaroos in Iran and Australia continue to improve. Brazil and India are worrying. The Turkish outbreak phase. The development stage of Saudi Arabia and Canada.

Turkey (> 90, 000), Iran (> 83000), Brazil (> 40, 000), Canada (> 37000), India (> 18000), Peru (> 1. 6), Israel (> 13800), Saudi Arabia (10484), Japan (> 11000), Australian kangaroo (6642), Malaysia (5425), Indonesia (6760), Singapore (9125), South Africa (3300), Philippines (6599).

< 2 > current playback: crude oil avalanche, commodity wailing, black system period resonance downward.

1. Spot market prices: overall down, down 10% 40 yuan / ton, Shanghai, Hangzhou down 30 yuan / ton.

Trading volume: general

The market mentality is cautious.

The billet in Tangshan area is temporarily stable to 3100 yuan / ton.

Raw material end:

Scrap prices continued to rise in part.

The price of bifocal remains unchanged.

Iron ore market: the port spot market fell 5-15 yuan, Shandong direction PB powder mine 643-650 yuan / ton in early trading. Steel mills still purchase cautiously as needed, and the room for negotiation in the afternoon is expanded. It's a normal deal.

2. Futures:

RB2010 main contract: within the day between 3351 and 3306 shock downward, the end of 3337.

HC2010 main contract: within the day between 3218 and 3159 shock downward, the end of 3185.

Iron ore i2009 main contract: fell sharply in the day between 616 and 598.5, closing at 602.

Note: the number of futures seats in the East China Sea has increased by 50,000 against the trend. What kind of debauchery do you think about now?!

Coke J2009 main contract: within the day in 1701.5 to 1651 between the sharp increase in positions fell, the end of 1670.

Coking coal JM2009 main contract: within the day between 1130 and 1095.5 positions fell, the end of 1108.


< 3 > current forecast for tomorrow

1. Spot: enter the stage of resistance to decline.

2. Futures:

RB2010 main contract: concussion between 3370 and 3270.

HC2010 main contract: concussion between 3250 and 3150.

I2009 main contract: concussion between 610 and 590.

J2009 main contract: concussion between 1710 and 1630.

JM2009 main contract: concussion between 1140 and 1070.

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

Futures trading tips:

Thread, hot coil: it is suitable for high altitude and low operation in the short line range. In the middle of the period, most of them gradually stepped in on bargains.

Iron ore: high altitude in the short range.

Bifocal: high altitude in the short range.

Timely stop profit stop is a hard road.

RB2010 main force contract: support level 3300, 3270.

HC2010 main contract: support level 3150.

I2009 main contract: support level 590, pressure level 610.

J2009 main contract: support level 1650, pressure level 1710.

JM2005 main force contract: support level 1060, pressure level 1140.


< IV > Information and heart language.

The settlement price of 1.WTI5 monthly crude oil futures closed at-37.63 US dollars per barrel, closing at negative value for the first time in history. Brent crude oil futures closed down $2.14 at $25.94 a barrel. At the time of writing, Brent crude oil futures fell below the $20 / barrel mark, down more than 23% in the day. WTI crude fell as much as 42.29% to less than $12 a barrel in June.

2. Ministry of Finance: from January to March, the national general public budget revenue was 4.5984 trillion yuan, down 14.3 percent from the same period last year, and the national general public budget expenditure was 5.5284 trillion yuan, down 5.7 percent from the same period last year. The Ministry of Finance recently plans to issue a further 1 trillion yuan of special local government bonds in advance. At present, the Ministry of Finance is guiding all localities to correspond the quota of special bonds to specific projects as soon as possible, organize preparations for the issuance of bonds, and strive to complete the issuance by the end of May.

3. [China's steel bar production fell 2.9 percent in March from the same period last year] according to the latest data from the National Bureau of Statistics, in March 2020, China's steel bar output was 19.015 million tons, down 2.9 percent from the same period last year, and the cumulative output from January to March was 53.028 million tons, down 1.9 percent from the same period last year. In March, the output of China's medium and thick wide steel strip was 13.172 million tons, an increase of 11.0 percent over the same period last year, and the cumulative output from January to March was 39.845 million tons, an increase of 11.4 percent over the same period last year.

In March, the output of wire rod (wire rod) in China was 11.52 million tons, down 5.5 percent from the same period last year, and the cumulative output from January to March was 3345.1 tons, down 3.3 percent from the same period last year. In March, China's raw iron ore output was 74.757 million tons, up 9.1 percent from the same period last year, and the cumulative output from January to March was 187.902 million tons, down 0.1 percent from the same period last year.

4. [Shagang scrap purchase price increased by 50] scrap supply units: Shagang scrap purchase price will be increased by 50 yuan / ton from April 22, 2020, the specific scrap price shall be subject to 2020-F14 price. In addition, the price of building materials in late April is pushed flat (the price of Shagang thread is 3650, the second phase is 60 yuan / ton).

5. According to SMM tracking data, a total of 78 ships arrived at China's main ports between 4.12 and 4.18, with an estimated arrival volume of 12.01 million tons, down 1.82 million tons from the previous period and 1.22 million tons from the same period last year. During the period, Australian exports increased by 1.91 million tons to 17.59 million tons over the previous period, an increase of 825000 tons over the same period last year, while the proportion of Australian shipments to China remained about 87.5 percent. Brazilian exports increased by 1.48 million tons to 6.24 million tons over the same period last year, an increase of 2.69 million tons over the same period last year. [SMM Steel]

6. Steel.

Short-term logic: first, crude oil avalanche. Second, scrap prices continue to rise independent arc furnace capacity expansion and long-process production limited expansion. Third, weather factors cause demand to look back. Fourth, there is no pre-festival inventory replenishment proposition for high inventory pressure and May Day five-day holiday. The author prospectively deduces that the driving force of steel prices falling from late April to early May is being realized. No, no. In the short term, it is expected that the probability of destocking will slow down 2-3 weeks later this week, and the probability of total inventory of the five major varieties and rebar will drop to last year's peak at the time of non-epidemic after the first ten days of May. Only then do you have the driving force for a sustained rebound.

7. Raw material end.

It is difficult to sustain the continued rise in scrap prices.

Bifocal prices continue to have limited downside space.

Diamond iron ore is mainly the manipulation of funds to tell stories, to tell the story of the supply reduction of the epidemic king …. No, no. The short-term target position is about 575. What about the shutter?! For crude oil, did the epidemic not stop its supply reduction? Why did it fall to minus $41 a barrel? In the medium term, the impact of the essential epidemic on its demand reduction is far greater than the impact of supply. No, no. Medium-term normal how to fall personally think is reasonable! In short, in the medium term, the author's point of view remains unchanged.

8. Continue to pay attention to overseas outbreaks and crude oil shows.


With the words of yesterday.

1. Steel prices do not have the conditions for a sustained rebound in the short term (from late April to early May), but they do not have the driving force for a sustained decline. The main logic is detailed in the weekly review, do not repeat! During the period of another fall is a good opportunity to replenish inventory! Hope and go and cherish!

Steel back, only base difference suppression; waiting for spot strength guidance, the rebound can still continue to move forward! Pay attention to the RB2010 main contract 3350 3320 support, meet the low gradually accept.

2. Raw material end.

Scrap prices are prone to rise but fall in the short term due to the expansion of supply.

Bifocal price stability, logic and point of view remain unchanged.

Iron ore is affected by Brazil's Vale plan to reduce production, market funds are more keen to copy the epidemic to affect production, while ignoring the impact of reduced production by steel mills in Europe, the United States, Japan, South Korea and other countries! Watching it is the hard way! Short-term logic: first, there is still a long way to go to expand the output of the long process. Second, scrap steel rose sharply, supporting iron ore prices. Third, Vale news copied as a follow-up walk. Fourth, the profit of the long process is about 300 yuan / ton, and it is expected to replenish the inventory before the festival. The short-term price is still on the strong side, but the upstream space is limited, the author's medium-term point of view remains unchanged.


With Zhou's comments.

Hanging mirrors judge supply and demand!

1. On the demand side: demand for steel and silver samples reached 4.75 million tons on Thursday. There are three worries or doubts in the market: first, steel traders feel that goods are not easy to sell, second, terminal demand hoarding, recessive explicit, and third, speculative demand comes into the market a lot. The author believes that do not worry about the ancients! What about the shutter? Is there no speculative demand for demand in the year-on-year peak season? Is demand so good in the year-on-year peak season? At the same time, whenever the recent steel fall, can maintain 220000 tons of rebar trading volume, such trading volume accounted for speculative demand? There is no denying that there is terminal demand from the end of February to early March, and the virtual table of food should be removed from the social library in advance, but at the same time, should we not consider that there is a quantitative inventory of terminal demand in normal times (without the impact of the epidemic)? This is naked care for one thing and the other! In short, the author believes that the return period of demand is not only indisputable, but also should think about the return period of rush demand!

2. On the supply side: on Thursday, the total output of the five major varieties reached 10.12 million tons, and the output of rebar was 3.435 million tons. The peak output in 2019 was 1107 tons and 3.815 million tons of rebar (see Table 2 for details). The operating rate of long process is about 81%, and that of independent arc furnace steel plant is 70%. Driven by profits, there is no doubt that output is expanding, but it is not far from the peak! It is expected that it will take another two weeks (early May), and it can be seen that the expansion of production is predictable and limited.


(3) the expectation of replenishing inventory before May Day in the market, the author does not agree, the market inventory is still high face, why not worry about buying goods? At the same time, there is a disturbance of weather factors in late April!

(4) despite the acceleration of destockpiling, there is still some way to go before the peak of the impact of the epidemic. What is the driving force for a sharp rebound?.

(5) deduced from the supply side, the high demand for raw materials remains for about 2 weeks, and how long can the long story of iron ore be told. No, no. The author's mid-term point of view remains unchanged, the epidemic affects the demand for stone more brilliantly. No, no.

To sum up, steel prices continue to rebound difficult to continue, from late April to early May to save the probability of the last decline in the second quarter!

The rest of the logic remains the same, do not repeat!


< 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!


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