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Ferrous metals continue to differentiate
Jul 17,2020 17:30CST
Source:Baocheng futures
The content below was translated by Tencent automatically for reference.

SMM News: first, hot spots in the market

(1) Ministry of Commerce: China's actual use of foreign capital increased by 8.4% in the second quarter compared with the same period last year.

Gao Feng, spokesman for the Ministry of Commerce, said that the actual use of foreign capital in China increased by 8.4% in the second quarter compared with the same period last year, which was significantly lower than that in the first quarter (down 10.8%), and foreign investment expectations and confidence were steadily improving. Together with relevant departments, on the basis of continuing to promote the implementation of existing policies to achieve results, we will step up efforts to study and issue a new batch of stable foreign trade policies, encourage local governments to adopt innovative measures in line with local conditions, and continue to help foreign trade enterprises deeply open up markets and grab orders. We will do everything possible to stabilize the basic market of foreign trade and foreign investment.

(2) the central bank carries out 200 billion yuan reverse repurchase

The people's Bank of China announced on the 17th that in order to maintain reasonable and abundant liquidity in the banking system, the people's Bank of China today carried out a 200 billion yuan reverse repurchase operation by way of interest rate bidding. In view of the fact that there is no reverse repurchase due today, the people's Bank of China has achieved a net investment of 200 billion yuan. This is the largest reverse repurchase so far this month.

The capital rate continued to rise across the board yesterday, with the Shanghai interbank offered rate (Shibor) rising 22.45bp overnight to 2.25 per cent, and seven-day Shibor rising 9.9bp to 2.25 per cent, which is the seven-day market rate that has once again broken the policy rate (2.2 per cent) since the 10th of this month.

(3) China's steel bar output increased by 6.3% in June compared with the same period last year.

According to the latest data from the National Bureau of Statistics, in June 2020, China's steel production was 24.465 million tons, an increase of 6.3 percent over the same period last year. The cumulative output from January to June was 123.212 million tons, an increase of 2.3 percent over the same period last year. In June, the output of medium-thick and wide steel strip in China was 14.181 million tons, an increase of 3.7% over the same period last year. The cumulative output from January to June was 80.063 million tons, an increase of 7.2% over the same period last year.

II. Future research and judgment

Steel: rebar shows a situation of double decline in supply and demand, weekly output decreased by 54700 tons compared with the previous week, while profits are still available, output continues to decline slightly more than expected, but the absolute quantity is still high, supply pressure still exists, and the follow-up focus is to track the changes of production. At the same time, demand continues the off-season characteristics, weekly demand and terminal procurement volume decreased month-on-month, but there is still an increase in inventory compared with the same period last year, so inventory continued to accumulate, increasing by 137500 tons month-on-month, with a small increase. At present, rebar fundamentals continue to weaken in the off-season, which is directly reflected by the rebound in inventory, and the decline in the optimistic atmosphere in the previous market, which leads to the weakening of the price under pressure, but the decline in production is higher than expected, coupled with the strong expectation of demand recovery under the good conditions of infrastructure, the price downward resistance also exists under the support of strong expectations.

Iron ore: domestic ore demand is still strong, giving ore price support, but the positive effect is weakening, on the contrary, the rebound in supply continues to push up Hong Kong stocks, and the powder ore ushered in a significant increase, the structural problems of inventory have also been alleviated, and the tight balance pattern of the mining market will continue to change. therefore, the fundamental driver is weakening, the follow-up drive mainly depends on the mature end, and the future trend will follow the mature end.

Coal coke: affected by two rounds of coke decline, the sales of some kinds of coal are not smooth, and the inventory in individual coal enterprises has accumulated again, but the orders and shipments of the main coke are good, and the coal enterprises have no intention to reduce prices for the time being. in the short term, the price of coal in the main producing areas will show a trend of differentiation. Although the second round of coke lifting basically landed, the short-term market wait-and-see mood is strong, but the iron and steel industry chain is supported from the bottom up, and coking coal prices are expected to fluctuate upward. The coke market is weak and stable, and there is no further sound after the second round of decline. From the inventory point of view, the storage in the factory of Shanxi mainstream coke enterprises is not high. In terms of steel mills, the start of blast furnace is temporarily stable, coke inventory has accumulated, some steel mills properly control the arrival of goods, and most procurement demand remains relatively stable. Although there is accumulation of steel inventory, but considering that the seasonal impact is coming to an end, coke shock is expected to rise.

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