[SMM current Review] A good wind relies on strength to send "steel" to Qingyun.
(review of steel prices in April and May and prospects in June)
I. Review of the steel market
The steel market in May, including the operation law of small rhythm, is perfectly realized, as detailed in the chart.
Figure 2: thread spot price operation chart from March to now (taking Hangzhou as an example)
Re-Prospect of the Operation Law of Steel Price in February and June
The author has prospectively predicted that the steel price will be expected in June, can it continue to be realized? This paper makes a multi-dimensional verification of this problem. No, no.
< 1 >, domestic macro
Premier Li's government work report: this year, there is no specific target for economic growth for the whole year, mainly because of the great uncertainty of the global epidemic and economic and trade situation, and China's development is faced with some unpredictable factors. This will help guide all parties to concentrate their efforts on doing a good job of "six stability" and "six guarantees." Liu Rihong, a member of the drafting group of the government work report, said that not setting specific targets does not mean that economic growth is not important, let alone allowing the economy to decline. That doesn't mean we don't have to work hard. We have to work harder. China is a developing country, and development is still the key to solving all problems and foundations. Protecting employment and people's livelihood needs to be supported by a certain amount of economic growth.
1. Premier Li's government report does not mention GDP growth for the first time, the author explains.
First, the epidemic sublimates the concept of governance, development is of course the last word! However, with the development of Greater China today, its economic output has steadily ranked second in the world, and it has the ability to further practice the great purpose of "being in power for the people." it cannot develop for the sake of development, and it is necessary to take into account all aspects, especially the livelihood of the people. Not mentioning economic growth does not mean that we are not working hard or growing, because there are too many uncertain factors. If we rigidly set the growth rate, strong stimulus policies may open the bow and increase the risk of even greater accidents, especially in the financial system. Therefore, only by proposing "six guarantees" and "six stability" can we strive for progress in stability, highlighting the ultra-high strategic determination of decision makers.
Second, the second is the uncertainty of the second outbreak of overseas epidemics, especially in Europe and the United States. But the author thinks that the probability of the outbreak of the United States Empire in July and August is high!
The third is the degree of uncertainty to which the process of globalization has been undermined by the United States. However, the author believes that due to the poor control of the epidemic, election and politics are above the epidemic and life, and will do whatever it takes to transfer domestic contradictions to increase the intensity of containment, attack, and stigma against China. Greater China's counterattack is also expected to be unprecedented.
2. Premier Li's government report once again mentioned that "there is no housing speculation", and the tone of the real estate policy remains unchanged. The author reads foolishly that it is the need of policy inertia, at least it will not be more stringent than last year. Short sellers are too sentimental in haste.
< 2 >, external environment
The epidemic in emerging countries such as India, A San and Brazil is still developing. No, no. If the second outbreak of the epidemic in Europe and America is superimposed, how will it affect the import and export trade in the second half of the year? But the impact on June is visible.
< 3 >, industry fundamentals
1. Verification on the demand side
Strictly defined, the demand for steel consumption is mainly capital construction and real estate prices, while the rest is consumed by net exports. domestic automobiles, shipbuilding, home appliances, furniture, energy materials, medical materials, common materials (motorcycles, electric cars, bicycles), military materials, and so on are widely used, and some overlap with real estate, such as home appliances, furniture, cables. The use of military materials is slightly mentioned, although the total consumption is not much, but the utilization rate of production capacity is very low, which is unknown. So the focus is on infrastructure and real estate.
In terms of infrastructure, if the investment quota for the new infrastructure is in place, the combined estimate of UHV + charging pile + 5G base station is only equivalent to one month's net export base (5 million tons), and the consumption of steel is only a drop in the ocean, so there is no need to bother. It is still the old infrastructure, especially the development and construction of the central and western regions. Judging from the message conveyed by the "two sessions", although the growth rate is limited, the base is large, and the increase in steel demand this year cannot be underestimated.
That is, the basic needs are indisputable.
In terms of real estate, the growth rate of the new construction area of the Bureau of Statistics at sunrise dropped by-18.4%, which was in the third quarter (judging from the current leading indicators of land sales, pipe piles and PC steel bars, it is not too bad), and it has little to do with June! However, the speed rate of construction area is 3.8%, which proves that the demand for speeding up construction is not bad. In June, the demand was mainly based on stock demand, and the epidemic caused a national average shutdown of about 60 days, considering that the rush demand of the whole Hubei Province had just started in May, that is to say, from the perspective of time delay, the demand for real estate stock lasted until the end of June.
Although the demand for net exports has been affected in the first four months, the recent recovery of demand in Southeast Asia is quite good, and most European countries have also resumed work and production, and the United States is as old as ever, and dead pigs are not afraid of boiling water. From this point of view, it is possible to increase in May and June.
Overall, it is highly probable that high demand will last until June. High demand is still lingering, and it is highly probable that the market's so-called demand peak will continue to falsify in June.
2. Verification on the supply side
At present, the operating rate of blast furnace and the utilization rate of capacity are 91.92%. Excluding the three expenses, the average cost is 3350 yuan / ton in the current period. The average profit per ton of steel in inland steel mills is about 100 yuan / ton. The actual average net profit per ton of steel is less than 100 yuan / ton. At the same time, the market still expects the price of scrap, iron ore and coke to rise. Independent electric arc furnace steel mills (with an operating rate of 70%) have reached a general loss again, and the price of scrap steel has risen again with only a slight nap. I would like to ask the shutter people, can the capacity expansion still be the same? Although the production limit of environmental protection in Tangshan is not in place, it is good that there is no limit to limited production.
As for the new increment of "capacity replacement" put into production, it has little impact on June, and most of it can be realized gradually in the second half of the year, and there is no need for red rain to wash the cheeks. In a word, it is a high probability event for the yield to maintain a minimum fluctuation on the high yield base in June (convergence probability at the beginning of June).
3. Unstocking for verification.
On May 21, the total inventory of the five major varieties is 22.29 million tons, the total inventory of rebar is 11.37 million tons, and the social warehouse is 8.37 million tons. For five consecutive weeks, the average decline of five major varieties is 1.53 million tons, and the social stock of rebar is 610000 tons. If it is estimated at this rate to 25 June (Dragon Boat Festival) after five weeks, the total inventory of five major varieties will be 14.64 million tons, and the rebar stock will be 5.32 million tons. If we consider the sample equivalent value of uniform caliber: the total inventory of five major varieties is 12.73 million tons, and the rebar bank is 4.63 million tons. In the same period last year, the total inventory of five major varieties was 16.13 million tons, and the rebar bank was 5.66 million tons (June 25, 2019), corresponding to the steel price of 4070 yuan / ton in Hangzhou market (June 27).
4. Cost verification
The overall tight balance between supply and demand of scrap resources, coupled with the profit per ton of independent electric arc furnace steel enterprises, has always been the target of long-process steel enterprises, in an attempt to force the younger brother to reduce production. Only the governor is allowed to set the fire, and the common people are not allowed to light the lanterns; they are willing to fight in the same room, but they are not in a hurry to fight each other. A new factor restricting the expansion of independent electric arc furnace capacity has been added to the market. It determines that under normal conditions, the price of scrap is easy to rise but difficult to fall. I would like to ask the shutter people, but the independent arc furnace capacity expansion is still the same?
The operating rate of blast furnace is too cold in high places, and the production limit in Tangshan is not as expected, so the demand is generally optimistic. On the supply side, Jiangsu Xuzhou, Shanxi, and Shandong are expected to strengthen production restrictions on environmental protection, Xuzhou has landed, Shanxi has always been thunderous, the rain is small, the reality is limited, Shandong people are kind, and 4.3 meters of coke oven carbonization chamber has been eliminated effectively in the early stage. but what is strange is the recent landing of the policy document of "fixing coke with coal", which greatly surprised the author. Can it "rain" again in the later stage? A rat fart spoils a pot of porridge. In short, in any case, strong realization of the road, Shanxi coke enterprises began the third round of 50 yuan / ton increase on May 25, superimposed market expectations increased, the fourth round of rise in mid-June landing probability, the author forward-looking deduction of high probability: once Ziwei East (1760), Hu Xingsen Yaomang (1900). At the same time, it is also a long profit-taking, every high cloth empty opportunity (hint: when the profit of coke enterprises reaches about 400 yuan / ton).
Affected by the tightening of thermal coal clearance, the market is also expected to heat up coking coal, superimposed "two sessions" limited production reduction in the northeast, the overall supply margin improved slightly, but the relationship between supply and demand has not changed.
Then again, in terms of divine mines.
The essential fundamentals of iron ore have not changed greatly, and the original sin is capital manipulation and storytelling.
Long position story editor:
(1) domestic port stocks have dropped to less than 110 million tons. The author asks, what is the inventory data at that time when the price is less than 50 US dollars per ton?
(2) Brazil ranks second in the world in the outbreak of the epidemic. The author asks, is the actual impact as great as propaganda? Australian kangaroo production capacity, shipping volume, overseas demand reduced why?
(3) the domestic blast furnace operating rate and capacity utilization rate are ahead, and the high demand is good! The author asks, even if the blast furnace output continues to expand, how much do we know about the increase in iron ore demand? Is the increase of scrap addition ratio related to stone increment? (see the author's iron ore demand article for details, do not repeat).
In short, according to the author's guess on the mood of capital manipulation: if 732 does not have an effective breakthrough, it may return to around 625, and then rebound to around 800. Before June, it still maintained a high and wide concussion, so we hope to take a long and empty participant and go and cherish it. The fundamental view remains unchanged. Hard core suggests that the snail-to-ore ratio has reached 4.9.
5. Verification of time and space dimension.
Macro-orientation, basic face-to-face dimension, the epidemic gives birth to or is doomed to this round of rebound is a weak cycle. The author deduces that the rebound time is about 45 days.
< 4 >, conclusion
To sum up, the raw material side rose sharply to help the current strong relationship between supply and demand, and now the probability continues to strengthen in June! The rebound in the general direction is not over. Spot target location: Hangzhou first-class brand for example 4000 ±50, Shanghai first-class brand 3900 ±50; Fuzhou Steel RB2010 main contract target location: about 3730.
Write on May 23