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Steel market to maintain high supply of steel price weakness continued throughout the year


Release:2019-02-26   Edit:Admin   From:Rising steel grating

 The core idea

 

From the point of view of the basis difference, the current rebar steel futures than rebar spot, more weak, spot rise opportunity than futures, futures risk than spot.For spot traders, appropriate intervention in some of the basis is set of operations can be, there is a certain opportunity to gain opportunities.

 

After the Spring Festival in 2019, the market, driven by high inventories, started a round of decline, followed by a pullback in demand expectations and environmental expectations.But in the whole process, through the real-time attention to the market, we found that the overall mood is not active, but driven by the market, passive changes, most market participants were carried away, the performance lags.And after a year of prices, how will the performance?Here are my thoughts on the following aspects:

 

1. Expected output.The biggest difference between winter production in 2018-2019 is that there was no big seasonal fluctuation in output, and the overall performance was relatively stable, which was unexpected by the market.Although there have been some news about temporary environmental protection and production limit in recent days, this kind of performance covers the whole year in 2018 and has not brought a great impact on the output. Moreover, the electric arc furnace has been gradually restored to work, and the overall situation is not low.In terms of yield, more attention is still paid to inter-species allocation and inter-regional changes, but the overall market remains high supply, which will continue throughout the year.

 

2. Inventory expectation: the total inventory of rebar steel mills and society is above 13 million tons and 17.3 million tons of building materials, lower than the beginning of 2018 and higher than previous years.Through inventory, production calculate apparent demand, two-thirds have reached normal levels, but the national building materials daily deal only in just less than half of the normal level in recent days, a few days ago even less than a quarter of the normal level, this indicates that there is a most of the shadow inventory did not respond, will in the later with the new supply, together.And the current level of demand, not enough to absorb the current output, so later or will continue to accumulate, and I expect the 2019 steel social inventory or will reach the level of 2018, or even slightly over.

 

3. The expectation of demand: after several days of downturn, the demand rises instantly from February 21 to 22. However, compared with the previous downturn, the rise is still far from the normal level of demand, let alone the reduction of stock.But what about later performance?We have learned that many institutions view the national real estate construction as weak, and the positive sentiment is more from the investment in infrastructure.But long do not say, say short first, on whether the current has really started a full resumption of work?Are the requirements fully operational?Still to be seen!Recently, the mood in north China is better than that in the south, so is the construction, which may be affected by the precipitation weather and its expectation.Real full demand is expected to start earlier than 2018, but not until mid-march.

 

In terms of the present situation, the market is a bit "empty status - more than expected", when demand is positive is expected to be amplified, after pushing on demand is up, the price also upward, but the inventory was still tired, so businesses are likely to generate panic, after all, the current cycle, businesses need to maintain stability of the stock is not the normal demand, rather than expected demand peatlands smoothly from library to cash.So the demand for more than expected, not yet.

 

So what's going to happen?We're going to go back to the regional strength analysis, and the base difference analysis.

 

1, the rebar rise is not driven by the east China, in north China, the annual seasonal regional fluctuations, starting in January, north China is gradually stronger than east China in a process, if north China lose this upward momentum, other regions are weak.At present, the inventory pressure in east China, especially in hangzhou, is much greater than that in Beijing. The price game between the two cities may directly lead to the long-short game.Personally, I think hangzhou may be the trigger of the overall risk, and there is a downside risk. Therefore, it is suggested to realize the risk gradually in the expectation of demand.

 

Second, from the point of view of the basis difference, the current rebar steel futures than rebar spot, more weak, spot rise opportunity than futures, futures risk than spot.For spot traders, appropriate intervention in some of the basis is set of operations can be, there is a certain opportunity to gain opportunities.