Judgment on Development Trend of Steel Prices in the National Market (7.02 - 7.06)

Last week, the domestic steel market showed another downward trend. The recent large-scale rainy weather at the same time in the north and south affected the market volume, the digesting speed of social stocks slowed down, and the inventory in some areas had increased to varying degrees, causing the market price to fall more than halfway. Starting next week in July, whether the steel market will interpret the “off-season lighter” market in the off-season of the traditional steel market?

[Review of the Steel City last week]

(A) The spot market continues to maintain a weak consolidation

According to the monitoring data of China's steel spot market, which is a well-known domestic steel spot trading platform, the domestic steel market maintained a slight volatility operation last week. Both the market's long and short-term forces are relatively balanced and the overall market price has not changed significantly. The prices of the three key varieties of building materials, hot-rolled coils, and plate were basically stable, and cold-rolled coils fell slightly. As of June 29, construction steel: the average price of Φ25mm secondary rebar in 10 major cities in China was 4,050 yuan, down 25 yuan from the same period last week and down 25 yuan from the same month of last month. The average price of Φ25mm tertiary rebar was 4,152 yuan, which fell by 25 yuan per week and fell by 22 yuan per month. The average price of the Φ6.5mm high line is 4056 yuan, down 26 yuan per week and 49 yuan per month. Hot-rolled coils: The average price of 5.5mm hot-rolled coils was 4,100 yuan, which fell by 57 yuan per week and fell by 78 yuan per month. Cold-rolled plate army: 1.0mm cold-rolled coil average price of 4898 yuan, down 62 yuan per week, monthly drop of 154 yuan. Plate: 20mm medium plate price is 4065 yuan, weekly fall, monthly drop 82 yuan; Profile: The average price of 25# I-beam in domestic major cities is 4310 yuan/ton, weekly down 18 yuan, monthly drop 60 yuan; Pipe: The average price of 108*4.5mm seamless tubes was 4,995 yuan/ton, which fell by 12 yuan per week and fell by 91 yuan per month.

(b) ** Electronic trading fell and fell

The rebar market experienced a turbulent decline last week. Weekly settlement price fell 50 points. After experiencing the small platform in front of the price, the rate of decline quickly increased, making the market seem to see no hope. As of last Friday, the 1210 contract of the main rebar of the last period opened at 4078 in early trading on the 29th and rose slightly in the afternoon. The highest daily rate was 4084 and the lowest was 4040. The closing time was -0.17% lower than the previous day. Today's turnover is 3426559 (million yuan), volume 842942 (hand), open interest 676702 (hand).

(III) It is still difficult for the steel market to reverse in the off-season demand

At present, the prices of mainstream steel products in the steel market are fluctuating slightly, the cost support continues to weaken, crude steel production is still at a high level, market demand is gradually slowing down, and the inception of social steel inventories will suppress the formation of steel prices, and the short-term market will decline slightly. At present, the serious overcapacity in the domestic steel industry, the chaotic regional layout, high cost, and tightening capital conditions have forced China’s steel market to remain sluggish for a long time, and it is difficult to turn over. It is almost impossible for steel prices to recover.

(4) Slight decline in crude steel production and rising inventory

In mid-June, the daily output of crude steel of key large and medium-sized enterprises was 1.655 million tons, which fell by 1.74% compared with the previous period. The national estimate was 1,970,500 tons, which fell by 1.45% compared with the previous period. Since late May, the national average daily output of crude steel is expected to remain below 2 million tons for three consecutive days, but it remains at a high level.

Inventory: On June 29th, the National Steel Social Inventories Index was 172.04 points, up by 0.45% from the previous week, and it had increased from last week's decline. Among them, the social inventory index of building materials was 204.47 points, up by 0.22% from last week; The plate social inventory index was 146.61 points, up 0.70% from the previous week.

(5) The raw material market remains basically stable

Billet Market: Last week, the domestic steel billet market was basically stable, and market transactions did not improve. The price of billet in the leading city of Tangshan fell slightly. The performance of the raw material market was not good. Iron ore continued to rise slightly, but the turnover was poor. Since the beginning of the week, prices in some regions have been slightly loosened. Some billets of Tangshan's general-purpose steel billet contain a tax price of 3570-3580 yuan per ton; Changli Anfeng is tax-deductible to Tangshan at 3580 yuan per ton, and the dealer's naked price is about 3430.

Iron ore market: Last week, the bullish atmosphere in the domestic ore market was slightly diluted, the overall market trend was slowing down, and transactions remained stable. Among them, the market price gap in Tangshan area narrowed, and the resource with high price slightly lowered. The import ore market was reduced slightly, the bargaining space was widened, traders' operating enthusiasm was not high, and the market had a wait-and-see atmosphere. Now Fangchenggang 63.5% Indian powder mine 995-1005 yuan; 63.5% Brazilian coarse powder 960-970 yuan; Zhanjiang 61% Indian powder mine 895-905 yuan; Tianjin 62% Australian PB fine coal mine 980-990 yuan. Domestic iron powder, Liaoyang 65% iron powder 750-780 yuan, Yingkou 65% iron powder 760 yuan, Yingkou Bayuquan Hong Kong 65% iron powder 790-800 yuan.

(Six) The price adjustment of the leading steel mills is steadily lowered

On March 26, Masteel’s base prices for thread, wire rod, plate screw, hot-rolled, SPHC, cold rolled, medium plate, galvanized, color coated, strip steel, angle steel, channel steel, small H-shaped steel and large H-shaped steel were kept stable in July;

On the 28th, Hebei Iron & Steel lowered the settlement price of Tangshan, Chenghe and Xuanhang Steel in June by 20 yuan, the price of secondary seismic rebar by 40 yuan, the price of tertiary seismic rebar by 30 yuan, and the price of tertiary disc screw by 30 yuan; The price of Shaoguan Steel's high line is reduced by 50 yuan; the price of rebar (inspection gauge) is lowered by 50 yuan; the price of spiral steel is lowered by 50 yuan.

The overall situation of the domestic steel market last week was still not very good. Last week, when the Hegang settled this month, the north and south regions were downgraded, again confirming the weakness of the 60-month market. In other regions, leading steel mills have also lowered their factory prices to maintain shipments.

(VII) Macroeconomic situation

The real estate speculative demand of the experts of the Ministry of Housing and Urban-Rural Development was basically squeezed out: Qin Hong, director of the Policy Research Center of the Ministry of Housing and Urban-Rural Development, said in Fuzhou recently that after more than two years of real estate regulation, speculative demand on the market has basically been squeezed out of the market. When attending the Straits Real Estate Forum, Qin Hong stated that on May 23 this year, the State Council executive meeting once again made it clear that stability and strict implementation of real estate control policies are required. The global steel industry will welcome a new round of production and trade disputes: The global economic outlook has turned dark and the steel industry has become overcapacity. Some high-level companies have stated that from Texas in the United States to Asia in Asia, sales wars are being launched around the country. Lower than cost. The global steel industry is ready for a new round of production and trade disputes. The price of oil may return next month or return to the era of 6 yuan: just after the New York crude oil fell below the psychological threshold of US$80 per barrel, but the petrochemical company’s refineries and ground refined oil inventories were mostly high or full, and sales continued for 3 months. decline. In contrast, social management companies in most regions are basically in a state of zero inventory. Newly-increed ** forecast for June: The CBRC’s requirement to “strengthen the credit supply” will be superimposed with the pressure of the bank’s mid-term entrance exams, which will make the market optimistic about the size of the new June increase, and agencies are expected to be new in June. The scale of credit increase is between 850 billion yuan and 1 trillion yuan. Shandong has received support for the elimination of compressed steel production capacity: Shandong Province issued a “notice” recently, and provided a one-off grant of 50 million yuan for the elimination of the first batch of steel production capacity that has passed inspection and acceptance, and is now allocated. The 50 million yuan to be implemented this time is a one-time subsidy for the dismantling of 16 ironmaking blast furnaces and 10 steelmaking electric furnaces that were accepted by the leading group of the province's elimination of backward production capacity. Steel companies have raised concerns about new production capacity in violation of regulations: Some enterprises have not implemented the requirements for energy saving and emission reduction, and implementation of the “three major” decision system is not strict enough. According to the disclosure, Baosteel, Wuhan Iron and Steel and Angang Group's subordinate enterprises have annual energy consumption without new approvals and non-acceptance of production capacity elimination in accordance with the regulations in recent years, which accounted for an average of 17% of the total energy consumption of 3 enterprises in 2010; audit sampling enterprises 617 Of the major policy decisions, 74 were in violation of the regulations, resulting in losses and potential losses of 3.461 billion yuan.

[Points of Attention this Week]

1. The macroscopic side still lacks significant support

International: The EU summit boosted the market last Friday, and European and American stocks soared. The victory of the Greek conservative New Party in the parliamentary election in support of the bailout agreement only temporarily relieved Greece of its risk of exiting the euro zone. The fundamentals of the Greek economy will not fundamentally change due to an election. Therefore, although Greece’s concerns about Brexit’s temporarily disappeared, there is still considerable uncertainty in the debt crisis in Europe.

Domestic side: The steady monetary policy should be properly adjusted in time and fine-tuning; the PMI dropped to 7 months in June; the minimum economy continued to bottom; and the suppression of commercial housing investment demand, etc., the domestic economic environment is not clear.

2. Inventories do not fall, they map to downstream demand

After a continuous decline in steel stocks for 18 weeks, it has finally slowed down to a rise. Inventories have once again used data to verify the downturn in downstream demand. Of course, most of the decline in social stocks last week was due to weather factors. However, if inventory increases for several weeks, it may lead to a sharp drop in spot prices again.

3, tightening of funds is expected to increase in July

Last week, on June 26 and 28, it reactivated 95 billion yuan and 30 billion yuan in reverse repurchase operations. As the amount of funds due in the open market in July is only 151 billion yuan, the two reversed repurchases with a total of 125 billion yuan will be due at the end of June. At the end of the quarter and at the end of the half-year, bank interest rates have continued to soar since mid-June. Taking into account the significant increase in deposits at the end of the quarter, on July 5, the Deposit Deposit Day will passively receive large amounts of funds. In addition, the persistently unsatisfactory amount of funds will continue to face relatively tight pressure on the capital side. In July, the central bank lowered the reserve requirement ratio more likely.

4, this week the domestic market or continue to weaken the consolidation

Judging from the traditional seasonal features, it is now entering one of the hottest summer months in the country. High-temperature climate and the southern rainy season will inevitably hinder the release of steel demand from the downstream industries. Demand fundamentals will remain weak in the short term, and this year the steel market is showing typical "The peak season is not prosperous and the off-season is even lighter." In addition, due to favorable policies and a time lag in investment recovery, the domestic market is expected to remain weak in the first week of this month.