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[SMM issue current Daily Review] what is the meaning of today's guillotine, the road to rebound more than a hundred wars!
May 12,2020 19:51CST
translation
Source:SMM
The content below was translated by Tencent automatically for reference.

(12 May)

< 1 > in terms of epidemic situation.

Domestic epidemic: confirmed / imported cases / asymptomatic / severe / 2331691760.

Shulan Mayor Jin Hua: recently, Shulan City, there have been 13 local confirmed cases, breaking the province's 73 days of no new local cases continue to improve. The next step is to fully enter the wartime state in accordance with the requirements of high-level risk prevention and control, take the strictest control measures, and go all out to do a good job in epidemic prevention and control. During the period of epidemic prevention and control, all clinics and retail pharmacies in the city have stopped selling drugs for the treatment of fever, and clinics do not receive fever patients.

Overseas epidemic situation: new / confirmed cumulative cases / deaths / 73785 / > 4.184 million / 282840.

CCTV News: from May 11, local time, the cities of Niteroy and San Gongkaro in Rio de Janeiro, Brazil, have been closed to the city since the wee hours of the morning, and vehicles from non-local residents have been banned from entering the city. Officers who enter the city with local identity cards are required to take their body temperature before entering the city. At present, 20 cities in Brazil have imposed city closures.

British Prime Minister Johnson: Britain has begun to lift the blockade and open up its economy. In the past, the position of the government was that people should go to work only if necessary. But now it needs to be emphasized that those who cannot work remotely, such as construction and manufacturing workers, can be encouraged to return to work. Members of the public are advised to wear masks in confined spaces such as public transport and shops where social distance cannot be maintained.

Us Empire priority: new / confirmed cumulative cases / deaths / 14027 / > 1.3858 million / 81795.

Serious countries and regions.

UK: > 223000 / 3923 32065.

Russia: > 232000 / 10899 2116.

Brazil: > 169000 / 5632 11653.

Spain: > 26.81 3480 26744.

India: > 70800 / 3607 2294.

Peru: > 68800 / 1515 1961.

Canada: > 6.99 1063 4993.

Pakistan: > 32000 / 1140 706.

Singapore: > 24600 / 884.

< 2 > current playback:

1. Steel spot market prices are generally stable, up and down each other: the North rose slightly; South China Guangzhou fell 10-20 yuan, East China Shanghai stable, Hangzhou weak stable, Fuzhou down 10 yuan / ton.

Trading volume remained strong.

Demand beauty: sink fish fall wild geese, close the moon shy flower.

The market mentality is positive.

The billet in Tangshan area is stable 3140 yuan / ton.

Raw material end:

Scrap prices continue to rise in some areas.

Zhangjiagang rose 50 yuan / ton, Quanzhou rose 50 yuan / ton.

Rizhao rose 60 yuan / ton, Liaoyang 30 yuan / ton.

Coke prices are stable and strong: the second round rose, steel mills do not speak for the time being.

Coking coal prices remain stable for the time being, but expectations of supplementary increases have strengthened.

Iron ore port spot early stable noon strong, the overall rise of 5 yuan. Shandong direction PB powder mine 665 yuan / ton has a transaction, Tangshan area PB powder ore 675 yuan / ton quotation. Steel factory inquiry is more active, but still on-demand procurement, the overall transaction is better than yesterday.

2. Futures:

RB2010 main contract: within the day between 3441 and 3467 narrow range on the strong shock, the end of 3464.

HC2010 main contract: within the day between 3315 and 3335 narrow range on the strong shock, the end of 3333.

Iron ore i2009 main contract: strong concussion between 627.5 and 638 within the day, ending with a close of 638.

Coke J2009 main contract: bottomed out between 1720 and 1745.5 within the day, closing at 1740.5.

Coking coal JM2009 main contract: a strong rebound in the day between 1074 and 1119.5, ending at 1114.5.

< 3 > current forecast for tomorrow

1. Spot aspect: shock uplink is the main.

2. Futures:

RB2010 main contract: concussion between 3450 and 3510.

HC2010 main contract: concussion between 3320 and 3380.

I2009 main contract: concussion between 630 and 650.

J2009 main contract: concussion between 1730 and 1770.

JM2009 main contract: concussion between 1090 and 1160.

3. Spot operation tips: high depositors continue to sell low suction rolling operation mainly, late callback opportunity to make up for the appropriate amount of inventory.

Thread, hot coil: in the early stage, the low position can be reduced by more than 3500, and the rolling operation of high throwing and low suction is the main operation in the new single interval.

Iron ore: high selling and low suction trading in the range.

Coke: more trading in the range.

Coking coal: more trading in the range.

RB2010 main contract: support level 3440.

HC2010 main contract: support level 3310.

I2009 main contract: support level 630, pressure level 650.

J2009 main contract: support level 1730, pressure level 1760.

JM2005 main force contract: support level 1090, pressure level 1130.

< IV > Information and heart language.

1. [military exercises in the Jingtang Port area of Tangshan Port will not affect the navigation, production and operation of the Jingtang Port area] yesterday, the Tangshan Maritime Administration issued a notice on military exercises in the Jingtang Port area of Tangshan Port. From 00:00 on May 14, 2020 to 24:00 on July 31, 2020, all unrelated ships and personnel are evacuated to the safe area in advance, during which unrelated ships are prohibited from sailing into the safety control area; According to SMM research, this military exercise is a routine exercise, the exercise area only a small part of the north end of the Anchorage of the Beijing-Tangshan Port overlaps, and there is no intersection with the port berth, other Anchorage, waterway and other normal production areas, and will not have an impact on the navigation and production operation of the Jingtang Port area. Beijing-Tangshan Port area also issued a notice statement this morning. [SMM Steel]

2. [national Bureau of Statistics: CPI increased 3.3% year-on-year in April PPI fell 3.1% from the same period last year]

China's CPI rose 3.3 per cent in April from a year earlier, up from 3.7 per cent, up from 4.3 per cent, while China's PPI fell 3.1 per cent, 2.5 per cent and 1.5 per cent in April from a year earlier.

3. According to SMM tracking data, a total of 91 ships arrived at China's main ports from 5.3 to 5.9, and the incoming cargo volume is expected to be 14.05 million tons, an increase of 1.21 million tons over the previous period and 1.72 million tons over the same period last year. During the period, Australian outbound exports fell 2.08 million tons to 15.6 million tons, an increase of 520000 tons over the same period last year. The marked decline in Australian departure in the current period is mainly due to the maintenance of a number of port berths. Brazil's departure from the port fell 820000 tons to 5.27 million tons from the same period last year, basically unchanged from the same period last year. At the same time, the SMM blast furnace operating rate in April was 86.4%, up 2.3% from the previous month, and is expected to continue to increase by 1.2% to 87.6% in May. Iron ore demand side continues to maintain the growth trend, and prices continue to maintain a strong trend in the short term. [SMM Steel]

4. Datong City Emergency Management Bureau and Datong City Local Coal Mine Safety Supervision Administration issued a "notice on stopping production and maintenance within a time limit for key periods", requiring 20 coal mines in Datong City to stop production and maintenance from May 12, 2020 to the end of the "two sessions." Coking coal futures soared, boosted by the news.

Note: if there is a "rainstorm", the output will be affected by about 4.5 million tons.

5. My opinion on the impact of military exercises: the market generally believes that there is no positive impact. Imagine that there has never been a time span of up to 75 days of motherland military exercises, there is no doubt about the positive impact on the market, there is no doubt about the extent of the problem! Including, but not limited to, delays in shipping, unsmooth entry to port, transfer fees, and the obstruction of northbound materials southward (although the volume is small in that season). No, no. In short, benevolence sees benevolence and wisdom sees wisdom.

6. Steel author forward-looking deduction and point of view remain unchanged, there is no more logic, in short, the low storekeeper strongly recommend to enter the market, time will not wait!

7. Raw material end.

Scrap price rebound is difficult to continue, need to wait for independent electric arc furnace and long process profits to expand, but the space is also limited. Logical thinking is simple: long process operation rate, capacity utilization rate has been in a high position.

Double coke environmental protection production limit on the road, coke basic good, smooth sales, inventory is not high. With the improvement of coke profits, the pressure on demand is about to become a recollection. In short, the author is still a sentence: once Ziwei East (stand on 1760), Hu Xingsen Yaomang (there must be a new high).

In terms of iron ore, the outbreak in Brazil is an indisputable fact; as for the fact that high domestic demand is a false proposition, the blast furnace operation rate is now higher than that of the same period last year, and the only way to play it is to add the proportion of scrap steel that has nothing to do with iron ore demand (see the article on high demand for iron ore in reverse, without repeating it). Short-term fund emotion superposition follows rebar, empty single temporary wait and see is appropriate, but the author's medium-term pressure point of view remains unchanged.

Attachments.

1. The recent price increase in steel mills is mainly, part of the flat push. The supply side has reached the level of the same period last year. With the continuous increase of scrap price, more than 5.6% independent electric arc furnace began to lose money, a small number of tons of steel small profit, independent electric arc furnace output short-term convergence probability; The operating rate of the long process is also at a high level, with an average daily iron flow of 2.37 million tons. If we want to continue to expand the shortage of scrap resources and generally converge to 200 yuan / ton, we should consider that the "two sessions" are imminent and that environmental protection will limit production on the road. The short-term output is difficult to expand or even has a small probability of convergence.

The price of cement continues to rise, and the demand for excavators is higher than expected, which confirms that the strong terminal demand is still on the way. No, no. As for the so-called May Meiyu season, demand will peak, but the bears "whistle on the night road". The author has also analyzed the impact of the rainy season, do not repeat! The center of gravity of steel price moves up in May, I am sure that it will remain unchanged! Hangzhou market is short-term affected by Shagang Pingtui and Sha, Yong, medium steel plants due to the conversion of high-quality carbon steel to disk snails, although the strength of the rebound is limited, but the general direction of rebound is indisputable. In short, it is suggested that late enlightened people every callback dare to enter the market to replenish the warehouse!

Coke fundamentals are sound, Shanxi opened the second round of increase of 50 yuan / ton, but the second round of rise and fall mainly depends on two factors, one is the elimination of 4.3 meters coke oven "rainfall" and long process profits must be expanded.

Iron ore view remains the same: short-term domestic rigid demand and Brazilian epidemic funds are still on the way, following rebar fluctuations; medium-term pressure is doomed.

2. According to the inventory data, on Thursday, the author expected that the total inventory of the five major varieties would be 23.2 million tons and 12 million tons of rebar, respectively, if the equivalent inventory data were taken into account, the total inventory of the five major varieties would be about 2 million tons and that of rebar about 1.2 million tons. That is, the total inventory of the five varieties is 20.2 million tons and the total inventory of rebar is 10.4 million tons. Corresponding to the current steel price, it is difficult not to go up.

< 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 before the outbreak of the overseas epidemic, the domestic counter-cyclical adjustment factors increased and accelerated, mainly including and not limited to new infrastructure, tax cuts, reserve reduction and other policies to stimulate the desire to hedge the epidemic and the target task of "six stability." even after the "two sessions", the national policy of "six stability" due to the outbreak of overseas epidemics has a certain probability of correction, but considering the role of inertia and lag, it can and will only be reflected in the second quarter. 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.

From a long-term point of view, the great change in the world pattern is certain, but there is uncertainty about who is in charge.

 

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.

There is no doubt about getting on the podium for the European and American epidemic Cup champion! For the good is the happiest, for the evil can not escape. Leisurely heaven good reincarnation, the vast sky forgive who! At present, the coronavirus is the common enemy of mankind, the truth is to practice a community with a shared future for mankind, and to control the epidemic bean storehouse 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 squarely the main contradiction of the epidemic bean storehouse, but gives priority to opening the policy of unlimited easing! 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 United States has further curbed Greater China in all directions, which is by no means alarmist talk! Chairman Mao's quotation: the heart of US imperialism will not die, so we should always raise our vigilance!

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 to 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. The solution of inventory towering and floating clouds

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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