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Second quarter will be an important time window for steel demand

Release:2019-04-03   Edit:Admin   From:Rising steel grating

 China securities journal: what will be the impact on the fundamentals of the black market after the end of peak production in the heating season?


Shi lei: under the influence of the production plan of peak shift in the heating season of 2018/2019, the blast furnace operation rate dropped significantly. In the week of January 4, the blast furnace operation rate in hebei was 55.24%, down 9.52 percentage points from the end of September 2018.The national blast furnace operation rate was 64.23 percent, down 3.86 percentage points from the end of September 2019.The following January and February saw only a slight recovery in the blast furnace operation rate, and the overall level remained close to the low level in December 2018.In march, due to heavy pollution weather emergency plans in tangshan and wu 'an, the production of steel mills and coking enterprises was limited.Crude steel output, which has contracted month by month since hitting 2.552 million tonnes in October, is in line with the blast furnace rate.3 months wrong peak production is strict, expect crude steel output falls easily difficult rise, but because heating season wrong peak production ends and the seasonal rule that steel mill produces, after predicting 3 months, steel mill will be able to resume production gradually, crude steel output also will enter rebound cycle.


China securities journal: at present rebar social inventory at what level?


Lei shi: with the continuous destocking, rebar prices showed a sharp adjustment in November 2018, and traders' enthusiasm for winter storage slowly recovered. Rebar social inventory started to turn up from 2.889 million tons in the week of December 7, and increased for 13 consecutive weeks to a stage high of 10.1866 million tons in the week of March 1 this year.Steel traders' replenishment of rebar inventories pushed prices higher in the winter.But then as the spring approaches, had winter move of inventory to the downstream market, rebar social inventory since March 1, presented by all round, to inventory weigh on steel prices nearly a month, in the downstream consumption has not yet officially started, inventory to speed is relatively flat, subsequent steel demand growth is accelerated, shipment will be made by steel prices for resistance evolution driving force.


China securities journal: what are the expectations for steel demand in the second quarter?


Lei shi: the growth rate of real estate investment remains relatively high, but the growth rate of real estate enterprises' land purchase area and capital availability fell rapidly in the first two months of this year. The growth rate of new housing construction area and the growth rate of commercial housing sales both dropped, showing signs of cooling in the real estate industry.Steel exports fell again, is expected to second quarter steel demand is still dominated by domestic consumption.However, growth in fixed-asset investment picked up slightly, mainly due to a pick-up in investment in railways, roads and other transportation sectors, which led to a rebound in infrastructure investment for the fourth consecutive month.Therefore, the second quarter will be an important time window for steel demand.


China securities journal: what is the outlook for the black market?


Lei: after the end of march, the production is expected to restart, the tonnage of steel profits will be restored, and the blast furnace operation rate will also be boosted. However, it is still possible that there will be an emergency of periodic environmental protection production limit in the spring, which will affect the supply.In addition, real estate projects and infrastructure projects will also enter the construction season, is bound to increase the consumption of steel.On the whole, black both ends of supply and demand are expected to pick up.For the black series leading rebar, due to the 1910 contract price has been close to the discount billet, and the spot discount is close to 500 yuan/ton, so the short term price drop space is limited, while the demand is still expected to pick up, can bargain layout of the middle line more orders.