Steel structure engineering company analysis steel price rise is difficult to end

Recently, the price of rebar futures has fluctuated sharply, and the roller coaster market has increased the divergence between long and short markets. The month-on-month recovery of short-term fixed asset investment and the replenishment of inventories by terminal traders jointly supported steel prices to remain around 2,000 yuan / ton. In recent trading days, the spot trading price of steel has fallen sharply with the futures price, but because the decline is smaller than the futures price, and the billet price in Tangshan is relatively firm, the futures price is again discounted. Spot traders' short-term views on steel prices have warmed, coupled with the macro environment conducive to steel prices, it is still too early to say the top.

The main reason for this round of steel price increases is the combined effect of the market's consistent expectations for steel mill production cuts and the recovery of the real estate industry. Although the "supply-side" reform has not yet seen substantial results, the capacity data of the steel industry still shows a clear pattern of surplus, but the recent rise in profitability brought about by the rise in steel prices has not made the steel mill production rate rise significantly. In the market environment of significant rise in steel prices, the average daily output of domestic crude steel in late February was 2.05 million tons, down 70,000 tons from 2.22 million tons in the same period last year, a significant year-on-year decline.

The recovery of the market has made many steel companies have plans to increase or resume production, but the actual domestic capacity utilization rate is still down, and the average daily output of the five major steel varieties fell by 44,000 tons year-on-year. In the current state of steel mills generally having a profit of 100-250 yuan / ton, the blast furnace operating rate of the national sample steel mill only increased by 2.35 percentage points from last week to 76.66%, which is a certain gap with the 85% blast furnace operating level in the same period last year. Some inland areas such as the northeast and northwest are too serious in the early stage of losses, and the resumption of production is less restricted by funds. Whether the national blast furnace start can recover significantly in the later period is a major factor affecting whether steel prices can continue to rebound. Judging from the resumption of production at this stage, the blast furnace operating rate seems to have not recovered enough compared with the profitability of more than half of the steel mill.

The macro environment, mainly the rapid rebound of the real estate industry, has eased the market's pessimistic view of steel oversupply. At present, the overall social inventory of steel has decreased by 1.7809 million tons year-on-year compared with last year, a decrease of 22.32%, and the inventory of steel mills is also significantly lower than the same period last year. Inventories are low, but demand recovery is strong, especially mid-range traders have concentrated replenishment after the sharp rise in steel prices, and steel mills have begun to frequently raise prices. From January to February, the cumulative completion of domestic real estate development investment rose from 1% year-on-year to 3%, and the cumulative sales of commercial housing expanded significantly to 28.2% year-on-year, an increase of 21.7% over the end of last year.

On the raw material side, with the improvement of steel mill profits and the increase in blast furnace operating rate, iron ore demand has also increased, and iron ore prices have increased year-on-year. The CIF price of 62% grade iron ore at Qingdao Port rose to US$63.74/mt from US$46.26/mt in mid-February, an increase of 38% in just half a month. But rising iron ore prices did not keep port inventories up, with major port inventories falling to 96.95 million mt for several weeks as of March 11. Mine prices have risen sharply, but port inventories have struggled to break through last year's average of 100 million tons. The available days of iron ore in large and medium-sized steel mills are maintained at about 20 days, and some small steel mills are even close to zero inventory due to the expected future market mine price to fall again. Therefore, from the short-term supply of domestic iron ore, the contradiction between supply and demand has eased compared with the previous period. However, from the perspective of the capacity plans and shipments of several major miners in Australia and Brazil this year, the increase in production of foreign miners in the context of China's steel industry capacity clearance still maintains the year-on-year growth rate last year. Regardless of the overall cyclical factors of commodities, the oversupply of iron ore is more than last year. The price trend of iron ore has a decisive impact on the price of the black industrial chain from the raw material end, coupled with the weak bargaining power of the coal coke link, after the short-cycle inventory adjustment, the downward pressure on the price of raw materials led by iron ore price is greater.

Therefore, under the background that many short-term benefits have not been overdrawn and falsified, it is too early to conclude that the futures price of 2,000 yuan / ton is a phased top.