❒. In terms of demand, the volume of building materials of the mainstream traders in the country shows that the terminal demand is temporarily high, and the performance in East China is relatively good*. The apparent consumption of rebar in November*week is 3.944 million tons, which is higher than the same period of the previous year. Higher level.
❒. Rebar stocks decreased by 290,700 tons to 3.431 million tons on a week-on-week basis, and fell for the fifth consecutive week after the National Day holiday. The week-on-week ratio fell by more than 7%, and steel mills’ inventory decreased by 195,800 tons to 2.164 million tons. The factory and traders are still operating with the idea of active downsizing.
❒. The risk point is the seasonally weakening pressure of the November-December demand brought by the cold weather and the northern heating period, and since the 2020 Lunar New Year is in January, the possibility of the accumulation of the library in the second half of November is not ruled out. Under the effect of supply and demand, the inventory de-conversion rate may slow down in November, so we need to focus on the arrival of inventory inflection points.
Recently, the trend of steel prices has once again triggered a hot debate in the market. With the advent of seasonal demand, the bearish voice has come and gone, but steel prices have not completely broken the rebound pattern. The mood of the market may be temporary, but whether it is power or pressure, after all, it depends on the supply and demand pattern.
1. Although the absolute level of output remains high, there is no obvious relaxation in policy.
In fact, since the second half of 2019, the correlation between air quality and policy has been significantly improved, and in order to ensure that the degree of air pollution is controllable, environmental protection policies in this area have been in constant stream, whether from the frequency of publication or the content of documents. From the above point of view, there is no obvious relaxation in the policy.
The Shandong Provincial Department of Industry and Information Technology and the Shandong Provincial Department of Eco-Environment jointly issued the Notice on Organizing the Implementation of the Different Peak and Wrong Peak Production in the Key Industries of 2019-2020 on October 25, 2019. The implementation principle of the peak production time is 2019. From November 15th to March 15th, 2020. According to the air quality improvement target and the heavy pollution weather forecast during the heating period, the cities can formulate the wrong peak production control plan in combination with the actual organization, and clarify the specific measures, time periods and duration of the industry, enterprises and regulation of the peak production.
At the end of October, the Office of the Leading Group for Air Pollution Prevention and Control of Hebei Province issued the Notice on Launching Orange Warning and Level II Emergency Response for Area I and Regional Double Pollution Weather, requiring Area 1 (Shijiazhuang, Baoding, Hengshui, Xingtai, Yiding, Ding) The state, Xinji, Xiong’an New District, and District 2 (Tangshan, Langfang, Zhangzhou, Qinhuangdao) cities issued an orange warning of heavy pollution weather at 8:00 on November 1, and launched a Class II emergency response. During the emergency response period, enterprises and projects that are included in the “positive list” of ecological environmental supervision shall fully guarantee normal production. Under the circumstances of ensuring effective operation of pollution prevention and control facilities and strict implementation of pollution prevention and control measures, no production, no production, no inspection, Do not disturb, encourage enterprises to reduce emissions.
In November, the supply side will not change much in theory. Although the overall rebar production this year is higher than the same period of the previous year, from the overall air quality and blast furnace operating rate and capacity utilization rate this year, this year’s production limit is stronger than last year. Actually, it is strong, at least there is no market expectation of loosening this year’s production limit. From the content of the relevant November air pollution control plan proposed by Tangshan City, the difference between October and October is not big. The big risk in the supply-side policy in November is mainly due to the difference between the implementation of the heating season and the expected output. Moreover, the degree of supply contraction during the National Day in October this year is significantly greater than in previous years, and in the case that the production restriction policy still exists and the steel mill profits remain low, the recovery process will be correspondingly extended, making supply difficult to appear. The phenomenon of a big increase.
2, demand is temporarily high, but there is a seasonal weak pressure
On the demand side, the volume of building materials of the mainstream traders in the country showed that the terminal demand was temporarily high, and the performance in East China was relatively good*. The apparent consumption of rebar in November*week was 3.944 million tons, which was higher than the same period of the previous year. Level. In terms of real estate, commercial housing transactions, land supply, and land sales all declined in October. In terms of infrastructure, in the third quarter, the National Development and Reform Commission still intensively approved major projects, and the intensity of policy planning has not diminished.
From the current demand indicated by high-frequency data, from November to February, the seasonal demand is off-season. As the weather turns cold and the heating season is close to the production node, the construction of the downstream site will be restricted, and the terminal demand will be seasonal. Weak pressure, whether the seasonal weakening of this round can be separated from the high level maintained in the same period this year, whether the decline can exceed last year, but also need to look at air quality and control implementation, can be combined with inventory changes. As for the downstream industry, as the country’s real estate regulation and control progressed, real estate did not experience a cliff-like decline. The overall performance in October was less than that in September. However, from a seasonal perspective, commercial housing transactions and land supply and transactions generally appeared at the end of the year. The law is related to the demand for real estate enterprises at the end of the year, while the risk of real estate in November is the constraint of capital policy; the support for infrastructure is still not reduced. The NDRC emphasized the importance of the new channel in the western land and sea in the third quarter. As well as accelerating the 127 key railway special projects, the overall infrastructure construction has maintained a steady and increasing trend. The risks are the tight fiscal situation and the possible impact of local government’s high debt.
3. The process of destocking is smoother. In November, it is expected to weaken or slow down.
According to Mysteel data, as of November 8, the rebar social inventories decreased by 290,700 tons to 3.431 million tons on a week-on-week basis, and fell for the fifth consecutive week after the National Day holiday. The weekly cycle ratio decreased by more than 7%, and the steel mill inventory decreased by 19.58 on a week-on-week basis. From 10,000 tons to 2.164 million tons, steel mills and traders are still operating with the idea of active downsizing.
From the statistics of successively increasing inventory cycles over the years, the inventory increase cycle generally begins in December, and * begins early in the second half of November. In November, unless the demand terminal is weakened or the production limit is invalid, the output will exceed the expected growth. Probability stocks will continue to de-trend in November, but the speed may be slowed by the impact of the off-season demand.
From the perspective of the overall structure of steel, the impact of environmentally-friendly production limits in November is limited. Due to the impact of the heating season in November and the low profit of steel mills on the recovery of production capacity, the probability of a large increase in supply is small, and the focus is on the demand side. The current demand side shipments are in good condition, and the gap between the inventory and the same period last year is also significantly narrowed. The de-library speed is obviously better than the previous year’s preference. It is the confirmation of the current demand side performance. The overall status of the author believes that the steel price is still short-term. support. The risk point is the seasonally weakening pressure of the November-December demand brought by the cold weather and the northern heating period. Moreover, since the Lunar New Year in 2020 is in January, the possibility of accumulation in the second half of November is not ruled out. In the next November, the rate of destocking may slow down, so we need to focus on the arrival of inventory inflection points.
Post time: Nov-14-2019