In November last year, in the context of weakening margins of environmental protection and limited production and pessimistic expectations, steel prices fell in a cliff-like manner. After the G20 summit at the end of the month, Sino-US trade friction eased, market sentiment improved, steel prices oversold and rebounded, and then environmental protection in Tangshan, Handan, Henan, Jiangsu and Shandong strengthened. Sintering machines were limited in production, production stopped and blast furnace overhaul increased, and steel prices oscillated. Upside is about 200 yuan / ton. Looking back at last year's fundamentals, environmental protection and production and maintenance as the main tone, blast furnace operating rate and capacity utilization continued to decline, steel output fell sharply from last November's high, and supply improved. On the demand side, the temperature in the south was not the same as that of the shutdown. The transaction volume of building materials stabilized and the terminal demand exceeded expectations. After January of this year, it is expected that production will be loose, high supply will resume, inventory will accumulate, and demand will usher in the weakest time node. On the whole, steel prices will be under pressure.
After September last year, environmental protection and production were weakened, and air pollution gradually increased. According to the data of China's air quality online monitoring and analysis platform, the Tangshan air quality index climbed for two consecutive months in October and November last year, and the maximum reached 332, which was significantly higher than the previous annual average of 98. In the middle and late December of last year, air pollution continued in Tangshan area. In order to ensure the completion of the annual target of air quality, relevant departments successively issued a number of documents, which further strengthened the measures for the suspension and production restriction of steel and other industries. At the same time, Jiangsu, Henan and Shandong have also increased temporary production limits, and the amount of maintenance has increased. As a result, the supply of steel in December last year showed a large contraction.
According to a number of limited production documents issued by Tangshan, the time limit for intensifying production and control is up to the end of December last year, mainly to effectively achieve the peaking and degradation of heavy pollution, and ensure the completion of the provincial air quality in 2018. Improve annual goals. According to the data of China's air quality online monitoring and analysis platform, after the intensive management and control, the air quality of Tangshan has been significantly improved. According to the completion of its objectives and the intensification of the control period, it is expected that the production limit will be weakened in January this year. On the other hand, as the price of raw materials is suppressed, the profit of long-process steelmaking has rebounded to a certain extent, and the willingness of steel mills to suspend production is also small. Therefore, regardless of subjective will or objective factors, the possibility of subsequent production restrictions and production suspensions will be smaller than last December, and high steel supply will resume.
Sino-US trade in December last yearFriction eased, market sentiment improved, and building materials turnover stabilized. Combined with the production and inventory of rebar, its demand seems to be weak in the off-season and exceeds expectations. According to Mysteel's rebar production and inventory changes, the weekly average of rebar consumption in November and December last year was 3.5257 million tons and 3.412 million tons, respectively, which was lower than the average of April, May and October last year. Higher level.
But by the end of December last year, it can be seen from the total inventory data of the five major steel products that various varieties began to show signs of obvious accumulation. As of December 28 last year, the total inventory of the five major varieties was 12.25 million tons, +0.95% on a week-on-week basis; the total inventory of rebar was 5.045 million tons, an increase of 4.29% on a week-on-week basis. After entering this year's January, the demand that has appeared before is more than expected, and demand will continue to shrink further. Steel inventories will inevitably accumulate.
Near the Spring Festival holiday, steel just needs to weaken and is inevitable. According to the laws of previous years, the social inventory has generally appeared in the 30-50 days before the Spring Festival. The speculative demand derived from the winter storage is the main support for the price.
However, in recent years, the price of spring storage in the spring of the year has made traders suffer, and at the same time, the demand for steel in 2019 is generally not good. At this stage, the willingness to winter storage is low, and speculative demand is also suppressed. . Mysteel's 137 sample steel mill rebar stocks and changes in social stocks indicate that in mid-November last year, steel mill stocks appeared to accumulate, far before the accumulated warehouse nodes in previous years, when rebar social stocks were still in the warehouse. At the stage, traders took the initiative to go to the warehouse, reflecting that traders mainly focused on shipments, and the willingness of winter storage was generally low.
On the whole, compared with last December, in January this year, the probability of environmental protection production was loose, the profit rebounded, the steel mills' willingness to suspend production was reduced, and the supply of steel will return to a higher level. The situation of weak demand in the off-season is unsustainable. After the Spring Festival holiday is approaching, demand will fall to freezing point, inventory will begin to accumulate passively, and speculative demand will be difficult to stimulate. In the face of strong supply and demand, steel prices are under great pressure.
(Author: Cinda Futures)