Steel futures volatility narrowed

In 2018, the third year of the implementation of the supply-side reform policy, the company basically completed the target task of reducing the upper limit of crude steel production capacity during the 13th five-year plan period, and the annual cumulative decline of rebar steel futures and hot coil futures main contracts exceeded 10%.Analysts pointed out that in 2018, the national crude steel supply maintains a tight balance, and the overall profits of steel enterprises continue to improve. With the end of the supply-side reform policy, the lower support of steel prices in 2019 is still in place, but the fluctuation range may be further narrowed.In 2018, under the continuation of the main line of supply-side reform policy, the national steel market maintained normal production restriction, and the crude steel supply maintained a tight balance throughout the year.”Although the link of blast furnace production, but production enterprise by increasing scrap ratio in converter and the use of high quality to achieve the purpose of production, hitting a record high production, crude steel production in 2018 is expected to peak, close to 930 million tons, the ‘DeTiaoGang’ part of the table within the outer table after clearing increased, combined with the industry highly profitable to bring positive power production enterprises, the incremental part mainly comes from the long process of electrical furnace and electric arc furnace short process of converter part.”Galaxy futures research points out.Wang fangjie, deputy secretary general of China iron and steel scrap application association, said recently that China’s crude steel output in 2018 is about 930 million tons, of which the total consumption of scrap steel is 187 million tons, scrap ratio is about 20%, compared with the previous two years has been further improved.It is estimated that by 2030, China’s iron and steel reserves will further reach 13.2 billion tons, and the output of scrap steel resources will reach 320-350 million tons.”With the accumulation of steel in China, the increase of scrap resources and the prominent scrap price advantage, the total amount of scrap resources in China will be very sufficient in the next 20 years.”From the perspective of downstream demand, the actual consumption of crude steel in 2018 was 869 million tons, an increase of 11.08% over that of 2017, and the overall consumption was still driven by the real estate industry.And from the second quarter, crude steel inventory fell to a low and continued.Review of 2018 steel market fundamentals, futures Qiu Yuecheng everbright, Dai Mo said the 2018 steel iron and steel production capacity to the target market has been basically completed, the steel industry investment growth rebounded sharply, the demand side, decline in real estate investment and growth are faced with new development, infrastructure repair expectations are still in the short board, but funding for infrastructure investment and debt restraining growth will remain, the boom of automobile, home appliances, shipbuilding industry entered the downward cycle, manufacturing investment rebounded significantly.Pay attention to two aspects of disturbance factors into 2019, everbright futures research that need to pay attention to the trend of the steel market from two aspects.First, in terms of cost, the new round of production expansion cycle of major mines in the world is nearing the end, iron ore supply is in a tight balance, and the price performance will be relatively stable.Coke is facing greater environmental protection and capacity reduction pressure, the price performance is expected to be strong.As the profit of steel mills shrinks, the support of cost to steel price in 2019 will be strengthened, especially the production cost of electric furnace steel is worth paying attention to.Secondly, policy, 2019 pollution prevention and control will not be significantly relaxed, environmental restrictions on production will still affect the pace of steel production.At the same time, with downward pressure on the economy increasing, domestic monetary and fiscal policies are expected to be further relaxed, which will raise market expectations in a phased manner.Looking forward to the future, everbright futures research said: “it is expected that in 2019, the domestic steel market will present a pattern of strong supply and weak demand, steel prices and profits of steel enterprises are facing a downward shift in the center of gravity.At the same time, raw material prices under the condition of relatively strong, the cost of steel prices will significantly enhance the supporting function of steel prices as a whole or cost will fluctuate, volatility will be further narrowed from 2018, 2019 main rebar and hot rolled futures contracts band in 3000 yuan/ton – 3800 yuan/ton, the spot price fluctuates in 3300 yuan/ton – 4000 yuan/ton.The focus of the market may shift from the supply side to the demand side, focusing on the performance of downstream real estate, infrastructure, automobile and other industries, external macro-disturbance and market capital conditions.

Post time: Jan-02-2019
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