[SMM interview] short-term rebar prices have room to fall, but the long-term trend is not pessimistic.

SMM9 March 21: up to now, the expected "Jinjiu" has not appeared for a long time, iron ore, spiral volume in this month but all the way down. Today, ferrous metals fell sharply again, the main contract for iron ore fell 2.88%, the main thread fell 1.59%, and the hot coil fell 1.37%. Futures prices are at their lowest level in the last two months or so. In response, SMM interviewed Liu Huifeng, an analyst at Donghai Futures. "the decline in rebar prices since September is mainly due to the recovery of demand during the peak season, which is lower than the expected high level of superimposed supply," he said. We can see from our estimated balance of supply and demand that the gap between supply and demand of rebar has been negative since July and turned positive only slightly in the second week of September, indicating that rebar is still in a state of oversupply and prices are expected to continue to be under pressure in the short term. "

Liu Huifeng pointed out that in the medium term, some negative factors began to transform gradually. First, with the continuous compression of steel mill profits, steel mill construction has reached the phased top area. By the third week of September, the blast furnace capacity utilization and daily average hot metal output of 247 steel mills across the country have declined for five consecutive weeks, and the weekly output of rebar in the latest phase has also decreased by 97200 tons compared with the beginning of September. Considering that there are signs of tightening environmental protection production restrictions in various places since September, this trend is expected to continue in the later stage.

Second, since late September, the demand of the construction industry has begun to improve. We have seen that the operating rate of cement mills has rebounded for four consecutive weeks, with a cumulative recovery of 8.66 percentage points, and the apparent consumption of rebar in the latest phase has also rebounded by 97700 tons. Although the current real estate regulation and control policy continues to tighten, considering that real estate enterprises hold a large amount of land in the second quarter, the growth rate of real estate investment is not expected to decline significantly before the end of the year; with the gradual landing of fiscal policy, the growth rate of infrastructure investment will also hit bottom and pick up, so although the demand for rebar in the later period will not exceed the high point in the first half of the year, it may still have a certain degree of resilience.

Third, in the process of this round of futures adjustment, the range of the main contract and spot discount continues to increase, if the spot price can not follow, then the space for futures price adjustment is limited in the medium term.

Therefore, he believes that there is still some room for rebar prices to fall at present, but he is not pessimistic about the long-term trend, and he can pay attention to the changes of rebar inventory in the later stage. Once rebar begins to go to the warehouse continuously, the price may pick up at the bottom. In the short term, it is still dominated by selling short at every high.

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Contact: Xu Dean 18512069994