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How is the traditional seasonal behavior of steel broken?
Since the beginning of this year, domestic steel prices have risen significantly, and the unilateral rally has continued from April to August. In August, rebar futures rose 6.2% a month, and spot rebar futures rose more than 300 yuan a month, reaching new highs in recent years. Light season is the biggest feature of steel prices this year.
However, as the traditional sales season "Golden Nine" is nearing the end, steel prices did not continue to soar in August strong pull, but appeared high wide volatility market. The rebar of rebar futures exceeded 8 percentage points, and the spot of rebar dropped by more than 100 yuan compared with the August high. After the "off-season is not light", steel prices again interpreted "peak season is not prosperous."
For reasons, we think that the following are the main points.
First, the price is overdrawn. In this year's supply-side reform, normalization of environmental protection, heating season production expectations and other factors, steel prices have experienced as long as four months before the unilateral strong rise, for example, screw steel spot, four months tons of steel increased by more than 1,000 yuan. To a certain extent, it overdrew the high season market.
Secondly, the production limit is expected to perturb steel demand release rhythm. Since this year, the focus of supply-side reform in the iron and steel industry has gradually shifted from solving excess capacity to structural reform, in which environmental protection has become an important measure of structural production in iron and steel enterprises. Under the banner of the "Blue Sky Defense" campaign, environmental protection and emission reduction schemes have been introduced one after another in various parts of the country. Taking the volume of building materials market in Beijing as an example, the daily volume from July to September was 9282.7 tons, 9965.2 tons and 9837.5 tons, respectively. The seasonal stock characteristics of steel demand were no longer obvious.
Third, the market is expected to fail. Last winter, Beijing, Tianjin, Hebei and the surrounding "2+26" cities implemented environmental protection measures of staggered peak production, with a wide range, long span and great strength, unprecedented in the steel industry, and led to a rapid rise in steel prices. As early as April this year, there were many early plans for the production limit of the autumn and winter heating season in 2018. It is generally believed that the intensity of this winter heating season production limit is higher than last year, so the expectation of the future market is very high. However, in September, from the abolition of a clear proportion of production restrictions by the Ministry of Environmental Protection to the announcement by Hebei of a ban on all production restrictions, the expected contraction in supply this winter is still in place, but the extent may not reach last year's level, for which the market once suffered a high price correction due to expected losses.
But, on the other hand, the steel price rebound since late August has also, to a certain extent, released the risk accumulated by earlier price increases. Although some of the market expectations have failed, they have not changed completely. The market is facing a better inventory environment than previous years, social inventory is at a relatively low level in history, and there is no obvious accumulation accompanied by price fluctuations. Average daily output of crude steel continued to decline for two consecutive months, and the general trend of supply contraction will not change until the heating season is approaching. Fundamentally speaking, the steel market is still good and support, and the "silver ten" steel market can still be expected.
However, as the traditional sales season "Golden Nine" is nearing the end, steel prices did not continue to soar in August strong pull, but appeared high wide volatility market. The rebar of rebar futures exceeded 8 percentage points, and the spot of rebar dropped by more than 100 yuan compared with the August high. After the "off-season is not light", steel prices again interpreted "peak season is not prosperous."
For reasons, we think that the following are the main points.
First, the price is overdrawn. In this year's supply-side reform, normalization of environmental protection, heating season production expectations and other factors, steel prices have experienced as long as four months before the unilateral strong rise, for example, screw steel spot, four months tons of steel increased by more than 1,000 yuan. To a certain extent, it overdrew the high season market.
Secondly, the production limit is expected to perturb steel demand release rhythm. Since this year, the focus of supply-side reform in the iron and steel industry has gradually shifted from solving excess capacity to structural reform, in which environmental protection has become an important measure of structural production in iron and steel enterprises. Under the banner of the "Blue Sky Defense" campaign, environmental protection and emission reduction schemes have been introduced one after another in various parts of the country. Taking the volume of building materials market in Beijing as an example, the daily volume from July to September was 9282.7 tons, 9965.2 tons and 9837.5 tons, respectively. The seasonal stock characteristics of steel demand were no longer obvious.
Third, the market is expected to fail. Last winter, Beijing, Tianjin, Hebei and the surrounding "2+26" cities implemented environmental protection measures of staggered peak production, with a wide range, long span and great strength, unprecedented in the steel industry, and led to a rapid rise in steel prices. As early as April this year, there were many early plans for the production limit of the autumn and winter heating season in 2018. It is generally believed that the intensity of this winter heating season production limit is higher than last year, so the expectation of the future market is very high. However, in September, from the abolition of a clear proportion of production restrictions by the Ministry of Environmental Protection to the announcement by Hebei of a ban on all production restrictions, the expected contraction in supply this winter is still in place, but the extent may not reach last year's level, for which the market once suffered a high price correction due to expected losses.
But, on the other hand, the steel price rebound since late August has also, to a certain extent, released the risk accumulated by earlier price increases. Although some of the market expectations have failed, they have not changed completely. The market is facing a better inventory environment than previous years, social inventory is at a relatively low level in history, and there is no obvious accumulation accompanied by price fluctuations. Average daily output of crude steel continued to decline for two consecutive months, and the general trend of supply contraction will not change until the heating season is approaching. Fundamentally speaking, the steel market is still good and support, and the "silver ten" steel market can still be expected.
