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SunSirs:Black market conditions are good, futures may lead the spot up

January 03 2020 11:11:28     SunSirs (Molly)

In December, the overall situation of the black market is relatively weak, the price of finished materials generally fell, but the raw iron ore is still strong and rising, leading to the steel mills profit again contraction, the end of the year again encountered financial constraints. As a result, most steel mills in the stock enough, began production line overhaul, delay the decline in steel prices.

According to iron ore industry chain price rise and fall chart shows: construction steel prices generally fell, and the decline is larger. Mainly because the weather turns cold, the construction site starts to slow down, even shut down, so the demand is low, drag down the steel price. Pipe market prices are weak, mainly due to the impact of the overall low season demand in the steel market, infrastructure construction also slowed down, and prices fell. Stainless steel market is also depressed, mainly due to the decline in the raw material nickel market prices, drag down the special steel market. And plank market price rises, mainly because the market mainstream specification is out of stock, but the manufacturing industry is rush to produce at the end of the year, so the demand increases, which promote the steel price rise;

Although the lots of products of steel market spot prices fall, in the futures market, it still shows increase in the main market.

The main coking coal contract rose 1.04% to 1,164.5 by the end of the day. Coke main contract up 1.26% to 1883; Iron ore main contract 0.54% to 648.5; Hot rolled coil main contract up 0.84% to 3592; Rebar main contract rose 0.73% to 3,569. The overall trend, the rise of raw material futures higher than ready-made material, the whole industry chain goes into the rising channel.


Variety 1: iron ore market firm steady, price level in the middle

In terms of price, according to the price data of SunSirs, as of December 31, the average price of vehicle board at the port of 62%PB powder mine in Australia is $97/ wet ton, the price of 63.5% coarse powder in Brazil is $101.83 / wet ton, and the price of 62% printing powder is $88.65/ wet ton, up 1.86%, 4.49% and 0.90% respectively from the beginning of December.

Transaction: [port spot] a total of 1.848 million tons of main-port iron ore were traded, up 47% month-on-month; The average daily volume was 1.336 million tons last week, compared with 1.274 million tons last month. [forward spot] the cumulative turnover of forward spot was 510,000 tons, down 26.6% month-on-month, with an average daily turnover of 457,000 tons last week and an average daily turnover of 319,000 tons last month.

Futures: the main contract has been volatile since December, although the k-line has fluctuated a lot during the month, at $7.18/ dry ton. Mainly in the current spot prices, steel mills profit contraction, maintenance increase, is expected to weaken the future demand for ore.

In general, the daily k-line trend line frequently cross volatility, while the KDJ average after the cross, continue to diverge, there is no obvious cross trend, the futures market is expected to continue to rise, spot may have a small decline.


Variety 2: hot rolled coil market mainstream specifications are out of stock, prices firm and steady.

Price aspect, according to SunSirs price data, as of December 31, Shanghai Q235B 5.5*1500*C hot rolled coil average price of $563.47/ton, up 4.67% from the beginning of December. By region, prices in south China, north China and northeast China rose slightly by $1.44-$2.88 /ton, fell by $1.44 /ton in central China, and stabilized temporarily in southwest and northwest China.

Transaction: the trader quote generally stable, but the carrier quote continued to increase, there is no cargo merchant move phenomenon. And the current mainstream specifications are still out of stock, continue to generate market price sentiment. However, approaching the Spring Festival, there is currently no large scope of the phenomenon of hoarding reluctant to sell, most or high transaction prices. Overall, the market is still clear inventory; terminal replenishment demand has a small recovery.

Futures: the main contract before the exchange has achieved 8 consecutive rise, and after the exchange, although the overall market volatility trend, but still at the end of the month four consecutive rise. Show market bullish sentiment is still strong.

Transaction: social inventory continues to decline, up to the 26th, the national hot rolling inventory level at 1.62997 million tons, the week-on-week decline of 10,500 tons, the month-on-month decline of 169,600 tons, the year-on-year decline of 128,400 tons. Therefore, compared with the construction of steel mills, the supply of goods in the plate market is obviously less, support the price rise. And with year-end restocking demand from manufacturing, prices are expected to keep rising.

In general, after crossing the daily k-line, the daily k-line turns upward, the KDJ average reaches bottom and picks up, and the three-line crossover diverges. It is expected that futures and spot will continue to move upward in shock in the short term.


Varieties 3, the end of 2019 rebar market turnover turned good, the price rose slightly.

Price, according to the price data of SunSirs, as of December 31, the average price of 16mm grade rebar in Shanghai market is $529.30/ ton, down 8.92% from the beginning of December. However, at the end of 2019, the price began to rebound slightly, with the general rise in east and south China at $1.44/ ton, north China at $2.88-4.32/ ton, and central China at around $2.88 / ton.

Transaction,the overall transaction volume decreased in December, with the monthly average of 684,900 tons, down 198,400 tons month-on-month; However, the trading volume on the day at 700.5 million tons, four consecutive days of recovery.

Futures: the main contract in early December to exchange, and then presented a steady rise, and then stable market shocks. But at the end of the month, 4 consecutive rise, which 5 average has been determined to go up all the long line.

On the whole, the trend line is up, the KDJ average crosses, and the three lines diverge, indicating that the recent market long advantage is expected to continue to move up the short-term shock.


To sum up, after the New Year's day, the rise in futures prices may lead to a rebound in the spot price, while the firm price of raw materials will support the rise in the price of manufactured materials. In addition to increased maintenance of steel mills, supply continues to shrink, may offset the steel market's low season effect brought about by weak demand. Therefore, it is expected that in early January, black goods will rise slowly.

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