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Supply and demand two-way shrinkage steel price near weak far

Oct 20, 2017

Near November, the demand side of building materials to take the lead in showing off weak signs, spot to maintain a weak downward, the disk to maintain a wide oscillation state. From the current fundamental point of view, the need to weaken is the certainty of the fact that the late stage of limiting the way and degree of supply and demand is an important factor. Supply and demand two-way contraction, rebar in the short term difficult to see a large sustained rise in the market.

Expected weakening pent-up demand

First of all, from the point of view of the light season, "Golden nine silver Ten" after the terminal demand will present a high level of decline in the situation. In particular, after the northern region into the rain and snow, the terminal demand will enter a stagnant state. From the current supply situation, most of the limited production area specific implementation plan has not yet been issued, the high profit background steel mills still tend to increase the output of molten iron in various ways. Demand to take the lead in the weak, spot transactions have shown signs of weakness.

Second, the long-term demand for real estate also suppresses market upward expectations. From each round of the characteristics of the real estate cycle, year-on-year growth began to turn the head downward, the demand will continue to weaken. Data, housing new start and sales of commercial housing area cumulative year-on-year growth since last October began to weaken after the trend of continued weakness. January-September data show that the new start of the building area cumulative growth rate of 6.8%, commercial housing sales area cumulative growth rate of 10.3. The year-on-year growth in data continued to decline, which will also strengthen market expectations of weakening demand, thereby suppressing contracts in recent months.

The strength of restricting is still awaiting verification

August-September, the market began to formally focus on the Beijing-Tianjin-Hebei region heating season BF and Coking limited-limited expectations. According to the provisions of the document, November 15 to the following March 15 for "2+26" key city blast furnace will be limited to 50%, involving all urban steel production capacity of about 280 million tons, key cities 210 million tons. If strict implementation of the restriction, the impact of supply contraction is no doubt unprecedented, but the implementation of the difficulty of the current market is the biggest uncertainty factor.

From the concrete implementation point of view, only the Wuan region has issued a specific limited programme and strict implementation. For Tangshan, which has a larger yield, although the limited production time has advanced, the concrete implementation plan has not yet been promulgated. According to the market, it is difficult to carry out a one-size-fits-all method for BF production, and the structural problem of BF capacity is a difficult problem.

From the point of view, the recent Tangshan early limited to promote the short-term rebound did not continue to rise, but also reflects the market for the supply-side contraction degree of doubt. With the advent of the off-season, steel sales have begun to appear weak state. If the late-limited policy to land less than expected, prices more difficult to appear strong pull up.

Relative bullish far month contract price

From the point of view of spot sales, the spot performance is weak since late September, which is related to the weakness of demand. With the advent of heating season, the 1801 contract of threaded steel will be faced with the two-way contraction of supply and demand, the logic is difficult to form an obvious unilateral drive. But the opportunity to buy after the 1805 contract callback will become clearer. First of all, from the nature of the limited production, the enterprise of producing threaded steel is private enterprises. Compared with state-owned enterprises, the environmental protection standards, private enterprises will be more severe, it is expected that this winter more difficult to appear large inventory accumulation. Second, from the demand of the light season, the winter after the limited supply will usher in the demand for building materials peak season. Finally, the high absolute price is bound to limit the overall winter reserves of traders. If the overall inventory does not form a cumulative, far-moon contracts will be expected to go out of the obvious upward market.

Comprehensive view, accompanied by the need to take the lead in the off-season, terminal procurement has been weak, late heating season, the implementation of the limited-blast furnace and strength will become the key factors affecting the market. The main contract of rebar is difficult to form the obvious unilateral drive under the two-way contraction of supply and demand. A significant pullback in the 1805 contract will be a good buying opportunity.

 

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