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[SMM Hot Volume] is there still room for spot prices in May to limit production and make waves?
May 18,2020 16:55CST
The content below was translated by Tencent automatically for reference.

Approaching the two sessions, the news of production restrictions on environmental protection in Tangshan arrived as promised. Compared with the impact of previous environmental production restrictions, the market response is quite intense. According to SMM, the hot coil in the North China market rose 100 yuan / ton over the weekend, the strip steel rose 70 yuan / ton, the billet increased 70 yuan / ton, and the section steel continued to rise due to the suspension of production by independent rolling mills.

Seeing this situation, other markets are not willing to lag behind, raising spot prices substantially one after another. Among them, the South China market reflected quickly under the circumstances that it was more difficult to pick up goods and the specifications with fast circulation on the market were relatively tight, rising 120 yuan / ton in two days over the weekend. The East China market is also rising one after another today, with a total increase of 80,000,000 yuan / ton.

However, according to SMM, after the East China market rose, the transaction was better, and even some traders were closed. And after the South China market rose, the actual terminal transactions obviously can not keep up, the market currently maintains the momentum of rising prices, first stabilize and wait and see.

But it is worth mentioning that with regard to the production limit of environmental protection in Tangshan, SMM understands that it does not have any substantial impact on the blast furnace, basically the production limit of the sintering machine, and the subsequent impact on iron ore is even more serious, and the impact of finished materials is more limited. Therefore, it is expected that after the news of limiting production, the market will still return to the fundamentals of the industry.

At this time, traders in the South China market already have considerable profit space for sales, some traders with tight funds and inventory pressure are more willing to ship, the basis of the superimposed hot rolls is enlarged, and the resources that do the basis in the early stage are unpacked, and low prices affect the market. therefore, it is expected that the space for hot volume prices to rise in the South China market in the second half of May will be relatively limited.

On the other hand, the East China market has been in a state of undervaluation, its own arrival is not much affected by the price difference between the north and the south, the regional inventory also continues to decline, the superimposed mood has significantly picked up, and traders are willing to raise the price. Therefore, it is expected that there is still room for the hot volume prices in the East China market to rise in the second half of May to make up for the undervalued part in the previous period.

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