Since April, because the demand is not enough to undertake the current high supply and the superimposed cost has moved down, the spot price of rebar futures has dropped significantly, and the main contract 2310 has fallen below the integer mark of 3900 yuan/ton. The author believes that it is difficult to significantly improve the weak fundamentals in the second quarter, and the futures price of rebar will continue to fluctuate downward. However, considering the time-lag effect of the policy, the author believes that the expectation of the rebar price trend in the second half of the year should not be overly pessimistic. Rebar demand is unlikely to improve significantly in the second quarter.
Demand is difficult to undertake high supply is the main reason for the decline in rebar prices since April. Combined with the current market situation, the author believes that the demand for rebar in the second quarter will hardly improve significantly. The following is a brief analysis from the perspectives of speculative demand and actual demand:
Since mid-March, as the price of rebar began to adjust, a large number of futures packages accumulated in the market before have begun to be shipped one after another. Last week (April 17th and 21st, the same below), the bad inventory of Tangshan Steel fell to 837,400 tons, a drop of nearly 43.84% from the high point after the Spring Festival; the inventory of rebar in Hangzhou dropped 9.8% from the high point after the year. However, the bad inventory of Tangshan Steel still increased by 252,500 tons year-on-year, and the inventory of rebar in Hangzhou was also at a relatively high level, and the basis difference of rebar was still on the rise. In this case, in the next 1 to 2 months, the probability of futures and spot companies choosing to continue shipping is relatively high. Real demand continues to show the pattern of infrastructure hedging real estate. The performance of real estate data in the first quarter is still weak, especially the decline in the area of new openings related to rebar consumption remains at about 20%. Since the second week of April, the growth rate of commercial housing sales area has also slowed down. Considering that the current policy adopts a strategy of “supporting but not raising” for real estate, it is expected that in the next 1 to 2 months, it will be difficult for real estate to form a positive driving effect on rebar consumption. From January to February, my country’s infrastructure investment increased by 12.18% year-on-year. In view of the fact that the issuance of local special bonds in the first three months of this year has exceeded 30% of the annual limit, and the total frequency and proportion of special bonds issued in advance this year are also the highest in recent years. In the second quarter, there is a high probability that infrastructure investment will remain above 10%. From a historical perspective, rebar has a higher correlation with real estate, so the performance of rebar prices in the second quarter may still be weak.
Rebar supply peaks in stages
Thanks to the phased restoration of steel mill profits, the supply of steel products continued to show an upward trend in March. According to the National Bureau of Statistics, the average daily output of crude steel in March was 3.088 million tons, an increase of 228,800 tons from January to February; The average daily hot metal output of 247 steel and Guangzhou blast furnaces across the country and the output of five major varieties of steel also showed a rising trend. However, under the influence of high supply and weak demand, since the end of March, the profit of rebar has begun to decline, and the profit of rebar of long-process steel mills has dropped to below 100 yuan/ton at least, and short-process steel mills have once again fallen into a state of loss. At the same time, the profitability of 247 steel mills across the country has shrunk for three consecutive weeks, with a cumulative reduction of 16.45 percentage points; the rebar output of short-process steel mills has declined for three consecutive weeks, with a cumulative decline of 74,900 tons. It also peaked and fell back. In addition, since late March, the market has gradually increased rumors of crude steel production policy restrictions. According to the National Bureau of Statistics, domestic crude steel production in the first quarter increased by 15.03 million tons year-on-year (6.1% year-on-year), which means that production must be reduced by at least 15.03 million tons from the second quarter to the fourth quarter. Steel output is under control. According to high-frequency data, there is a high probability that the supply of steel products will increase in April. Considering the high base of crude steel production in the second quarter of last year, the probability of further tightening of steel supply-side policies is relatively high. Therefore, regardless of the profitability of steel mills or policy considerations, the supply of steel products has peaked, and will show a decline in the next 1 to 2 months .
Post time: May-04-2023