1. In January 2020, the domestic steel industry will mainly operate smoothly
Since 2020, the overall domestic steel market has shown a steady rise. On the one hand, the operating rate of domestic steel mills in the past three months has generally been lower than 80%, which has led to reduced output, reduced supply pressure, and support prices. On the other hand, the demand for terminal replenishment has lasted longer than in previous years, and downstream trade Increasing willingness of commercial winter reserves, resulting in unsatisfactory demand in the off-season, which in turn drives up prices. Furthermore, due to factors such as logistics restrictions and the Spring Festival holiday, the originally tight market supply and demand were mismatched again, causing steel prices to continue to firm.
According to the SunSis steel index chart, the steel index on January 22 was 949 points, a decrease of 10.89% from the highest point of the cycle at 1065 points (2017-12-05) and an increase of 92.49 from the minimum of 493 points on December 20, 2015. %. (Note: The cycle refers to 2011-12-01 to the present), up 7 points from the beginning of January.
From the comparison chart of SunSirs iron ore-rebar spot prices, in the past three months: First, the price of rebar in the first two months was mainly based on the rise, mainly due to short-term demand brought by the rush of construction sites at the end of the year. The price increase caused by the sudden increase. However, with the approaching of the Spring Festival holiday, the tide of workers returning to their hometowns came to a halt, the terminal demand shrank rapidly, and prices naturally fell. Secondly, the price of iron ore in the first two months was mainly down, mainly due to the increasing demand of steel mills for replenishment, and then driven by the rise in the prices of finished products, and then began to rise slowly. Finally, starting from January 2020, the prices of rebar and other finished products remained at a low and stable level, with fluctuations almost stagnant, and the steel market was gradually closed. However, iron ore prices have continued to rise steadily, on the one hand due to the continued demand for steel mill replenishment, on the other hand, under the events of hurricanes in Australia and the suspension of mining in Brazil, the supply has gradually decreased, and the market is expected to rise.
In addition, from the comparison chart of SunSirs iron ore-hot rolled coil spot prices, in the past three months: the price of hot rolled coils has continued to rise as usual, mainly due to market shortages and increased winter storage demand. And during January 2020, the market inventory has not yet experienced a significant accumulation increase, so the price is firm and stable, and has not declined.
From the perspective of the iron ore industry chain, during January 2020, the overall price of raw materials did not fluctuate substantially, but the rise in mining prices was still pleasing, mainly due to expectations of replenishment and supply shrinking, which also strengthened the prices of raw materials. Stable formation has formed favorable support.
In summary, during January 2020, the mining and steel industry chain as a whole maintained a stable operation, with little fluctuation in the market.
2. In February 2020, the domestic steel industry may fall first and then rise
The original stable steel market might effect by the "new coronavirus epidemic" event to create new uncertain factors. According to SunSirs, during the SARS period in 2003, the overall performance of the black market was weak. Among them, the prices of hot rolled coils representing plate varieties showed a straight decline, with a cumulative decline of up to 700 yuan / ton; while the prices of rebar were relatively stable, a slight decrease of 300 yuan/ton. In terms of appearance, manufacturing has a greater impact than the real estate market.
In terms of the impact of the "new coronavirus" incident in 2020, Wuhan is the worst-hit area in the country, and Wuhan, as the largest city in Hubei Province, is the largest transportation hub in Central China, and ranks China's urban economic growth in 2019. The sixth city has an important position for steel market demand and logistics transportation. Therefore, the epidemic situation may have a greater impact on the steel market.
In terms of inventory: As of January 17, 2020, the rebar inventory in Hubei Province was 286,300 tons, and the inventory in Wuhan was 262,800 tons, accounting for 91.79%, and it increased for three consecutive weeks in January. The national thread inventory was 7.0857 million tons, accounting for 4.04%. Wuhan's hot-rolled inventory in Hubei Province was 89,800 tons, and the national hot-rolled inventory was 1,863,700 tons, accounting for 4.81%. Therefore, from the perspective of inventory, the proportion of steel stocks is not large, and the impact on the country is relatively small.
From the perspective of supply, as of January 17, the operating rate of blast furnaces in 247 steel plants nationwide was 77.58%, which was flat week-on-week and increased by 1.74% year-on-year, basically at the normal level since the fourth quarter. The utilization rate of blast furnace ironmaking capacity was 78.88% , week-on-week decrease of 0.53%, an increase of 2.43% year-on-year; the average daily hot metal production was 2.2057 million tons, week-on-month decrease of 14,800 tons, an increase of 67,700 tons. All three data are below the average level in the third quarter. This shows that in terms of market supply, pressure is gradually decreasing. And after the holidays, despite the fact that steel mills have resumed work, after all, the current inventory accumulation is high, and market consumption takes time. Therefore, steel mills may delay construction to stabilize market prices.
From the perspective of demand, according to the National Bureau of Statistics, from January to December 2019, national real estate development investment increased by 9.9% over the previous year, the growth rate dropped 0.3 percentage points from January to November, and 0.4 percentage points faster than the previous year. Among them, the floor space of newly started housing increased by 8.5%, a growth rate of 0.1 percentage point lower than that in January-November, and a decrease of 8.7 percentage points from the previous year. It can be seen that the growth rate continues to fall, the shortage of funds in the real estate market has not changed, and the overall price of steel is bearish. According to the data of the China Automobile Association, from January to December 2019, China's automobile production and sales dropped by 7.5% and 8.2% year-on-year, respectively. percentage point. Among them, the production and sales of new energy vehicles fell 2.3% and 4.0% year-on-year. Among the main varieties of new energy vehicles, the production of pure electric vehicles increased slightly year-on-year, and the sales volume declined slightly. The production and sales of plug-in hybrid vehicles showed a significant decline. The automotive market continues to be sluggish, and the pressure on plate demand is increasing. Finally, according to the data of the China Shipbuilding Association, the number of shipbuilding completions nationwide in 2019 increased by 6.2% year-on-year; the number of new orders for shipbuilding decreased by 20.7% year-on-year. As of the end of December, the number of orders for handheld ships had fallen by 8.6% compared to the number of handheld orders at the end of 2018. The shipbuilding industry continued its downturn. So overall. The downstream demand of the steel industry has not yet been released in the future. And the long product market or the same as the plate, it is difficult to have a large increase in demand.
In conclusion, SunSirs analyst Hangsheng He believes that the fundamentals of the steel market in February were generally based on loose supply and demand, and the overall "priceless but no market" market will disappear at earliest after the Lantern Festival, that means, from mid-February or then will have new demand increase and the consumption of market inventory. In addition, the current epidemic event before the Spring Festival may delay the workers' rework time to a large extent, and may cause logistics to detour around Wuhan, further exacerbating the embarrassment of "less trucks, tight time, and more orders" brought about by the load limit event. situation. Therefore, it is expected that the price of steel will first fall and then rise in February, and the upside is limited. It will only appear in the second half of the year. The steel index runs in the range of 920-940 points.
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