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The coming of winter storage is dominated by the oscillatory operation of rebar.
Jan 13,2021 10:57CST
translation
Source:Futures daily
The content below was translated by Tencent automatically for reference.

Rebar futures prices rose unilaterally last week. As of Monday, rebar futures 2105 contract fell 147yuan / ton to 4348 yuan / ton. Spot prices are 4290 yuan / ton in Hangzhou, 4800 yuan / ton in Guangzhou and 4170 yuan / ton in Tianjin.

Seasonal decline in demand

With the cold weather gradually, coupled with the outbreak of the outbreak, short-term demand for building materials has been suppressed to a certain extent, the apparent demand remains low, month-on-month flat. With the approach of the Spring Festival, demand is expected to continue to weaken seasonally.

But judging from the industry data, new real estate starts and construction remain strong. From January to November 2020, the cumulative growth rate of new real estate construction area was-2% over the same period last year, up 0.6 percentage points from January to October, and remained on the rise for nine consecutive months. In November 2020, the area of new real estate construction increased by 3.52% year-on-year, the same as in October. Real estate construction area has also maintained a similar trend. From January to November 2020, the cumulative growth rate of real estate construction area was 3.2% over the same period last year, up 0.2 percentage points from January to October. The area of real estate construction in November 2020 increased by 11.92% compared with the same period last year.

Prior to this, the market was worried that after the introduction of the "three red lines" policy, real estate enterprises had difficulties in financing, affecting the pace of land acquisition and development of real estate enterprises. However, it is understood that under the new regulations of the "three red lines", the best decision for real estate enterprises is to speed up the development and realization of the existing land on hand, and at the same time slow down the acquisition of land, so as to repair the balance sheet and meet the compliance requirements of the "three red lines".

This conclusion can also be confirmed from the statistical data. In November 2020, new property starts were very strong, and the price difference between spiral and rebar was at an all-time high.

Generally speaking, under the suppression of the "three red lines", housing enterprises are more inclined to start construction quickly. Therefore, the rebar demand after the Spring Festival is likely to remain at a high level, which will form a certain support for the rebar 2105 contract price.

Seasonal decline in supply

Last week, the actual utilization rate of blast furnace capacity was 83.3%, a month-on-month decrease of 1.1 percentage points. The utilization rate of Tangshan blast furnace capacity was 80.6%, an increase of 0.4 percentage points compared with the previous month. The output of rebar was 3.49 million tons, a decrease of 10, 000 tons from the previous month and 4.7% from the same period last year. Of this total, the output of the long process was 3 million tons, a decrease of 40, 000 tons compared with the previous month, and that of the short process was 490000 tons, an increase of 20, 000 tons.

At present, the output of rebar as a whole remains stable. Recently, steelmaking profits have declined, the number of routine maintenance of steel mills at the end of the year has increased, and the prevention and control of the epidemic situation in Hebei has also led to passive production reduction in steel mills to a certain extent, so it is expected that the output of long-term process will fluctuate The profit of the electric furnace remains high. Although the electric furnace steel enterprises have a strong power to increase production, under the influence of the shortage of scrap resources and the power restriction of steel enterprises, it is expected that the output of the short process is mainly to maintain high stability, and the room for recovery is relatively limited.

Inventory elimination is better than in previous years.

As the Spring Festival approaches, demand weakens seasonally, coupled with the impact of cold weather, the epidemic situation is repeated, the existence of rebar stock continued to accumulate last week. Last week, the total inventory of rebar was 6.553 million tons, an increase of 145200 tons from the previous month. Of this total, the social inventory was 3.9558 million tons, an increase of 317100 tons compared with the previous month, and the inventory of steel mills was 259.72 tons, an increase of 13400 tons over the previous month. The substantial accumulation of social inventory shows that the real demand is under pressure, and the continuous accumulation of factory depots reflects the poor output of steel mills. Under the background of high rebar prices at present, the enthusiasm of traders to store and purchase goods in winter is low, and the future inventory pressure of factories and warehouses increases.

To sum up, at present, the demand for rebar is seasonally weaker, and supply is expected to decline in the face of losses in some steel mills in the north. On the whole, the rebar market is in a state of weak supply and demand. After experiencing a sharp rise in the previous period, rebar prices will continue to maintain a wide range of oscillations.

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