Off-season non - weak steel rebar futures to guard against expected overdraft callback risk

2020-07-26 14:20:10

Take rebar as an example. As of July 17, the closing price of the main rebar futures contract RB2010 was 3735 yuan/ton, up 169 yuan/ton from 3566 yuan/ton in early July.

Affected by futures, rebar spot price in the traditional off-season appears against the expected rise, hangzhou, Zhejiang first-line brand rebar price is 3670 yuan/ton or so, compared to 3580 yuan/ton in early July up 90 yuan/ton.

There are mainly three reasons for the strong fluctuation of rebar futures price:

First, better macro expectations have led to a rebound in commodity prices.

With the outbreak under control in China, the economic recovery in the post-epidemic era is accelerating. A series of macroeconomic stimulus policies introduced in response to the impact of the epidemic are gradually showing their effects. In the second quarter, GDP achieved positive growth and the stock market rebounded sharply, raising the market's expectations for economic recovery in the second half of the year.

Affected by this, domestic nonferrous metal, chemical and other commodity prices rebounded.

Second, iron ore prices continue to rise, long - process steel cost support is obvious.

Affected by strong demand for blast furnaces, low iron ore inventories and the epidemic in Brazil, a major producer of iron ore, domestic iron ore prices have risen sharply.

As of July 17, the main contract price of iron ore was 824.5 yuan/ton, up 82.5 yuan/ton or 11.1% from 742 yuan/ton in early July.

In the same period, rebar futures prices rose from 3580 yuan/ton to 3735 yuan/ton, up only 4.3%.

The rapid rise in iron ore prices continues to compress the profit margins of long-process steel mills.

According to disk measurement, the virtual profit of rebar is only 100 yuan/ton, in the case of raw material prices did not fall, the steel mill is not much of an active price reduction space.

Third, the release of the demand for plate downstream, restricted in the off-season price adjustment of construction steel.

In the post-epidemic era, the order of production and life in China has been basically restored, and domestic consumption has been released in a compensatory manner.

At the same time, stimulated by the relevant policies, the production of part of the steel industry quickly resumed, thus driving the increase in the demand for relevant steel.

For example, the country's auto and elevator production has recovered rapidly, driven by policies such as car transport to the countryside and renovation of old residential areas.

Data from the National Bureau of Statistics shows that in June 2020, automobile output was 2.311 million, up 20.4 percent year on year.

Production of elevators, escalators and lifts reached 124,000 units, up 15.9 per cent year on year.

With the increase of plate demand and the firmness of price, the price of construction steel in the low consumption season lacks the power to fall, and the space for falling is not large.

Macro expectations, cost support and the pursuit of funds make the futures price of rebar in July relatively strong movement, spot prices follow the rise, raw material prices have been spiraling through new highs.

But that does not mean there is no risk of a correction ahead of peak season.

First, affected by the late high temperature and typhoon season, the demand season is difficult to arrive in a short period of time.

After about a month of meiyu, the later period may usher in extreme weather such as high temperature and typhoon.

Efforts to combat flooding and prevent secondary disasters will continue to hamper the pace of construction in the coming weeks.

At the same time, with the approach of the high temperature weather, the manufacturing industry is affected by power brownouts and heat escape in summer, the pace of construction may slow down, thus affecting the release of all kinds of steel demand downstream.

According to statistics, as of July 17, the weekly apparent demand for construction steel in China was 3.5724m tons, down 7793m tons from 4.3517m tons last month, down 1.09m tons from the peak of 4.665m tons in the first half of the year.

The seasonal characteristic that demand falls back is more obvious, restrict the rebound of steel price in off-season.

Second, in the early demand stimulus, steel supply continues to increase.

After entering July, by the futures pull up the impact of steel spot followed up, in the process of rising steel prices, steel mill production enthusiasm has been improved.

China's crude steel output in June was 91.5797 million tons, up 4.5 percent year on year, according to the National Bureau of Statistics.

From January to June, the total output of crude steel in China was 499.011 million tons, up 1.4% year-on-year.

In June, the country's output of hot rolled ribbed bars was 24.465,000 tons, up 6.3 percent year on year.

From January to June, the total output of hot rolled ribbed bars in China was 123.22 million tons, up 2.3% year-on-year.

The increase in supply short-term pressure on the market prices rise substantially.

Third, steel inventory continues to rise, affecting market confidence.

Affected by the epidemic, steel social inventory has been at a relatively high historical level this year, which is the main variable restricting the upward movement of steel prices this year.

After entering the third quarter, with the seasonal reduction in demand, steel inventory continued to increase.

According to statistics, as of July 17, the total inventory of national construction steel (including steel mill inventory and social inventory) is 11,721,300 tons, compared with the previous week of 11,583,800 tons increased 137,400 tons, compared with June of 10,425,900 tons increased 1,295,400 tons, compared with the same period last year of 8,059,600 tons increased 3,661,700 tons, inventory has increased for five consecutive weeks.

To sum up, considering the impact of factors such as the difficulty in the arrival of peak season demand in the short term and the reflection of market expectations in advance on the disk, rebar futures price is expected to be mainly adjusted by shock in the short term, and the possibility of a callback before the peak season is not ruled out.

On the operation, it is recommended that light or short positions wait and see, waiting for the callback after the buying opportunity.