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The price trend of deformed steel bar

Under the influence of an environmental rumor, black commodities in the futures market have dropped sharply in recent days. In the afternoon of Sept. 11, the decline of black commodities deepened. By the end of the day, the main coke contract was down 4.89%, the main screw steel and hot coil contracts were down 4.30% and 4.57%, respectively. On Sept. 12, the price of screw steel continued to fall, closing at 4,050 yuan / ton, down 2.71%.

Prior to September 10th, the market rumors that the environmental limit production ratio was canceled, triggering a sharp fall in steel futures. In this regard, September 11, the Ministry of Ecology and Environment Department of the relevant personnel told reporters, before the media reported that the content of the program is different from the formal program content, after the official document is issued, we will release the relevant rules for the first time. On the same day, A shares opened, steel, building materials, coal and basic chemical industries such as collective plate fell. By the close, according to the CITIC Class I classification, the basic chemical sector fell 0.86%, coal sector fell 2.07%, building materials sector fell 2.22%, steel sector fell 3.61%.

According to reporters, there are rumors in the steel market that the "Beijing-Tianjin-Hebei and its surrounding areas in the autumn and winter of 2018-2019 comprehensive air pollution control action plan" (draft for advice) issued by the Ministry of Ecological Environment in early August has relaxed the measures of environmental production restriction, or abolished the requirement of production ratios. This news immediately triggered a sharp fall in steel futures prices.

Market focus on environmental protection and limited production

"On the morning of September 10th, the domestic steel prices were all red, especially the prices of building materials rose sharply. The average price of rebar in major cities was 4622 yuan / ton, 60 yuan / ton higher than the previous trading day. However, by the afternoon of September 10, there was news that the environmental restrictions would be lifted, and the futures market prices had fallen. With the sharp fall in futures prices, some steel traders in September 11th also had plans to reduce prices. A steel trader in Shanghai said in an interview with reporters.

Regarding the market rumors triggered the steelmaking and coal and other plates fell sharply, Li Xinchuang, vice president of the China Iron and Steel Industry Association, said that it is impossible to limit production at present. He had previously argued that the current problem facing the steel industry is not just the issue of emission standards, but how to achieve ultra-low emissions. In the future, there will still be some iron and steel enterprises whose environmental protection is not up to standard.

"For areas or enterprises that do not meet environmental standards, limiting production or staggering peak production is one of the important means to achieve ultra-low emissions. Although the official document of the Ministry of Ecology and Environment has not been published, the possibility of maintaining the production limit this winter is still relatively high. The key is to ban all-inclusive, the Ministry of Ecology and Environment recently issued a paper that strictly prohibits all-inclusive protection of the rights and interests of legitimate compliance enterprises. Du Hongfeng, a steel analyst, said in an interview with reporters.

Meanwhile, on September 10, Beijing held a three-year action plan to win the Blue Sky Defense War and a videoconference on mobilization and deployment of the autumn-winter offensive in 2018-2019. Yang Bin, vice mayor of Beijing, presided over the meeting and delivered a speech. The meeting conveyed the spirit of the Beijing-Tianjin-Hebei and its surrounding areas leading group on air pollution prevention and control, and announced the main contents of the "Beijing Three-Year Plan of Action for Winning the Blue Sky Defense" and the "Autumn-Winter Struggle" in 2008-2019.

In the face of recent changes in market prices, Yide Futures analyst Li Boya told reporters that the focus of the current market game is indeed on environmental protection, in recent days the market mainly reflects the slightly panicked market sentiment and news changes. Limited production must be continued, but the intensity may be relaxed compared with last year.

However, according to the research report provided by CITIC Construction Futures, there are two different things about the policy documents circulated before, namely, the ratio of unlimited production and the specific ratio of unlimited production. The possibility of a full exit in the short term is very small. Of course, we do not exclude the limited production ratio will be adjusted. Specifically, how to adjust, I am afraid it depends on the weather, and two depends on the economic situation. Short term weather may be more important than the slow variable economic situation.

Frenzied screwed steel faces inflection point?

"Recent price fluctuations in rebar and hot coil futures have intrinsic motivations, and the debate over production limits is only a trigger, not a major cause. Since 2016, the domestic steel market has been oscillating upwards, on the one hand, the supply side of the dividend released by reform; on the other hand, the blue sky defense and environmental production restrictions also play a role in promoting. Du Hongfeng said in an interview with reporters.

Due to the large cumulative increase, from March 26 to August 20 this year, the main rebar futures 1901 contract rose 39.91%. Therefore, the market has the requirement of rational regression. As futures prices fall, steel spot will also fall. In the future, the supply and demand relationship will be the main factor affecting the futures price of screw steel, and the environmental protection restriction will bring the market the anticipation of supply-side contraction.

Du Hongfeng also said that the central bank's monetary policy, fiscal policy synergy, infrastructure to fill the shortage, infrastructure investment is expected to stop falling back to stability, help stabilize the demand for screw steel. In addition, the escalation of Sino-US trade disputes, the impact of Geopolitics on commodities, and the fermentation of emerging market crises will affect the orientation of domestic policy, thereby further affecting market risk preferences.

In addition, Yao Jin, a futures analyst at Meyer Yao, said that environmental restrictions were still a bigger support for this year's long black series. Although the market rumors that the heating season will be relaxed, the authenticity remains to be verified. According to the production restriction policy of Tangshan in August, the future production restriction of environmental protection will develop towards "differentiation" and "refinement" and will no longer implement "one-size-fits-all". Enterprises with good environmental protection performance and poor enterprises will implement different policies.
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