Steel market in August: when Hongji is difficult, how difficult it is to raise prices
(monthly Review on July 30)
A simple replay of the steel market in January and July
1. The main factors of multi-empty games include and are not limited to
The Trump virus continues to worsen, allowing the epidemic to develop, killing people, overriding Trump's election situation, urgent election situation, domestic political division and escalation, and other social conflicts have intensified. In order to divert domestic contradictions, the thousands of officials of the United States attacked, framed, and contained China's hysteria, rampant, and unscrupulous means, unilaterally causing the continuous deterioration of Sino-US relations. Feedback on the moderate acceleration of China's internal circulation.
The domestic macro-economy recovered faster than expected, with a GDP growth rate of 3.2% in the second quarter.
Post-disaster reconstruction after the flood season, such as the acceleration of water conservancy construction …. No, no, no.
(2) Industry fundamentals
Although output rose and fell in July, the absolute value remained high.
Inventory is in the accumulation stage, the total inventory of five major varieties is 22.29 million tons, rebar 12.18 million tons; the total inventory of five major varieties increased by 4.34 million tons over the same period last year, all due to the drag of building materials, rebar + wire rod increased by 3.81 million tons over the same period last year, and the rest of the varieties basically recovered. See the following table for details:
The apparent demand is mainly affected by the flood season in terms of building materials, which is generally OK.
Strengthening of cost support
Scrap steel prices are generally easy to rise but difficult to fall; iron ore is even more towering; although coke prices rebounded and stopped pullback, coke enterprises started the first round of rise, steel mills opened the fourth round of promotion, coke steel game is white-hot, the purpose of both sides is to seek stability. It is unrealistic to continue to rise and fall in the short term.
There will be a light rain in July when production is limited by environmental protection in Tangshan area.
two。 Spot aspect
Rebar prices generally rebounded from 100 to 230 yuan / ton in June, hot rolls and other varieties are stronger than building materials, mainly non-building materials varieties are less affected by the flood season, side evidence that later demand does not need to worry for the ancients! In short, the operation of the steel market in July, the road to rebound more than a hundred battles! The author deduces the perfect landing prospectively.
3. In terms of futures
Rebar RB2010 main contract up to 3816, hot coil HC2010 main contract up to 3855, iron ore i2009 main contract up to 861.5, coke J2009 main contract up to 2025. The author's forward-looking deductions are perfectly realized!
Verification of the operation law of the steel market in February and August.
1. Macro environment prediction
Sino-US relations: it is more certain that the Trump virus continued to deteriorate in August, and that the election situation continued to be urgent, with no doubt about the deterioration of Sino-US relations. There is a high degree of unpredictable conflict in Sino-US relations before the election, and it does not rule out the possibility that when Trump is desperate, he will start the war machine in order to postpone the election. But the probability of a direct war between China and the United States in August is low!
In the United States, GDP plummeted 32.9% in the second quarter. Trump, the king of lies and bragging, was badly blown, schizophrenia worsened, and the four dimensions of integrity and shame demanded that the election be postponed in order to seek re-election.
Domestic environment: the deterioration of Sino-US relations superimposed worries about the second outbreak of the epidemic in Europe, feedback on the acceleration of domestic circulation in the second half of the year …. No, no, no.
Politburo meeting transmission: firmly grasp the strategic basic point of expanding domestic demand, the economic growth rate in the third and fourth quarters is expected to be good-looking, aimed at making up for losses in the first half of the year. Expanding domestic demand is newly defined as a strategic starting point.
The flood season in June and July exceeded expectations, adding additional demand for post-disaster reconstruction.
Environmental protection production limit: the positive correlation between the environmental protection production limit in the heating season and the economic growth rate in the third quarter is a high probability event! The high probability of the connotation of the environmental protection production limit document of the Ministry of Industry and Information Technology in the heating season depends on the growth rate in the third quarter, followed by the annual target task of ultra-low emission acceptance.
In short, the deterioration of Sino-US relations has a very limited impact on the demand for building materials in August, which reflects the disturbance to the futures market; the domestic strong expectation is strengthened.
two。 Deduction of industry fundamentals
Real estate demand: although the meeting of the Politburo on July 30, the "housing speculation" tone remains unchanged, but the demand for work will not change! Do not need red rain to wash your cheeks.
In terms of the demand for new and old infrastructure deficiencies: due to the lag of funds in the first half of the year, major projects objectively affected the placement of the projects. with the funds in place in the second half of the year, there is no doubt that the demand will expand compared with the first half of the year
Post-disaster reconstruction is an additional demand increment!
In short, the author of the demand for the return of good-looking is not a dream, I am sure!
It is certain that the blast furnace operating rate fluctuates slightly in August, and it is determined that the hard core of the fluctuation rate is the addition proportion of scrap, even if the production limit of environmental protection has a limited impact on it.
The operation rate of independent electric arc furnace in August is mainly determined by the resumption of production after the flood season in southwest China, the degree of loss per ton of steel, scrap price and scrap resources. According to the current situation, the areas where independent arc furnaces are mainly distributed, such as the southwest region, are more affected by the flood season, and naturally recover more quickly after the flood season; East China is subject to the high inventory in Hangzhou and a large loss per ton of steel, and the fluctuation of the operating rate is very small. Fujian Province, such as Wuhang Steel Plant, still maintains a semi-operating state; as for Guangdong Province, it has long returned to normal (the main Rain Water influence is earlier than that in East China).
The net increase in production of "capacity replacement" in August is expected to be no more than 1.5 million tons.
On the whole, it is a high probability event that the output in August is maintained at a high level and fluctuates slightly.
In terms of high inventory
The total inventory of the five major varieties was 22.29 million tons on July 30, an increase of 4.34 million tons over 17.95 million tons in the same period last year. Among them, the total inventory of rebar is 12.18 million tons, an increase of 3.33 million tons over the same period last year, an increase of 480000 tons of wire materials over the same period last year, and a total increase of 3.81 million tons of building materials over the same period last year. The rainy season in June and July has a great impact on the demand for building materials, which is all a drag on the inventory accumulation of building materials! The weekly output of rebar in August is about 3.9 million tons, and the probability of small swing is large. In August, the apparent weekly demand of 420-4.3 million tons is expected to be safe. If so, the weekly inventory rate is 40-500000 tons. It will take 6-8 weeks for rebar inventory to reach the level of the same period last year, that is, after mid-September! Other varieties are obviously better than rebar. In other words, the overall inventory pressure of the iron and steel industry is intact! Only rebar makes people happy and worrying!
Raw material side
Scrap: the general direction of the shortage of scrap resources determines that the price is easy to rise and difficult to fall.
Coke: although there has been a small increase in the inventory of coke enterprises recently, there is no pressure on the overall inventory; the author is convinced that the demand is expanding in August; environmental protection production restrictions in Shanxi and Shandong are still on the road. No, no, no. Xuzhou
, some coke enterprises in Shanxi opened the first round of rise, some steel enterprises opened the fourth drop, the game of Coke Steel is white-hot, in essence, it is the purpose of both sides to seek stability! The author believes that the overall strong operation of coke prices in August is a high probability event!
Iron ore: recently, the high level of iron ore fluctuates greatly, only due to the slight increase in port inventory and the easing of structural contradictions (pellets are OK, powder ore is still tight, and steel mills have no choice but to increase the ratio of medium to low grade). It is still certain that the domestic demand for iron ore will expand in August; the supply-side hard core is still the worsening degree of the epidemic in Brazil. How can Vale guarantee the annual target of 3.1-330 million tons before the epidemic worsens?! Australian kangaroo based on profiteering to drive short-and medium-term production has been incisively and vividly! The author tends to think that there is no doubt that iron ore prices hit a new high in August.
In short, the raw material end support steel cost strengthening in August is a high probability event!
The flood of global currencies is more likely to lead to a revaluation of US dollar-denominated commodities.
The Federal Reserve is overflowing with money, and the bloodsucking countries have no choice but to follow up! Dollar credit is running out. Oh, the dollar index plummeted! The revaluation of commodity prices is just around the corner!
Deduction of current basis
August futures market is still stronger than the spot market, the main logic is that strong expectations are further strengthened, rebar spot is subject to high inventory; short futures multi-spot basis arbitrage if not stop loss, loss expansion capacity doubt! Hangzhou market is not less than 500000 tons of goods, if the stop loss helps the futures rise, the spot stop loss process will produce selling pressure on the price in the middle and later period. Of course the whole situation is safe and sound!
Iron ore is in the process of changing positions and changing months recently. No, no, no. In the process of moving positions, the probability of the far month in the first half is higher than that in the near moon, and the probability of forcing the sky in the second half is high.
To sum up, the author gives a point of view: the operation of rebar in August is still the road to rebound, Hongji is difficult, how difficult to boost the price! Rebounded by 150 + 50 yuan / ton, futures RB2010 contract broke through 3910, maintaining 3830 axis concussion.
Note: spot rebound, return pace will be accelerated!