Medium and long-term operation and risk prevention

2022-08-13
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Analysts pointed out in their speech on the theme of "analysis of the trend of steel market in summer and autumn 2018", the data of China Steel Association showed that the crude steel output of member enterprises in June fell slightly compared with the peak in May, but the decline was very small. The statistical blast furnace operating rate fell slightly after entering July, but the range was also very small. In June, the price of construction steel rebounded to more than 10%, which shows that the release of electric furnace steel production capacity is improving. According to the trend, although the production restriction policy of Tangshan will be introduced in July, and the proportion of production restriction will also be increased in Wu'an, Handan, the production restriction of steel mills in Xuzhou and other parts of Jiangsu will gradually recover, and July will still be a stage of high production

analysts said that under high production, the main reason for the high price is the support of environmental protection policies. At the Shanghai Cooperation Organization summit in Qingdao, the central environmental protection supervision team was stationed in 10 provinces and regions. In early July, Tangshan released three key emission reduction plans for polluting gases, which will have an impact on the later stage. Including the three-year action plan for the blue sky defense war issued by the State Council, and the temporary meeting of the Standing Committee of the National People's Congress on emergency functional equipment to review policies related to environmental protection. Environmental protection policies generally affect the market mentality, and the change of mentality is more reflected in futures. Recently, the futures market has performed significantly better than the spot market

in terms of demand, the downward trend of investment growth remains unchanged, and the risk of seasonal weakening increases. At the beginning of this year, a brief introduction of building materials is given to the materials that can be detected by the friction and wear tester. The demand situation is poor and the risk of economic downturn is high. The timely policy adjustment of the state has reversed this situation and made the demand basically stable. In April, the liquidation of PPP projects came to an end temporarily, the central bank sharply reduced the reserve requirement by 1 percentage point, and the meeting of the Political Bureau of the CPC Central Committee again emphasized that the effect of expanding domestic demand was not good or bad after three years. In June, the central bank lowered the reserve requirement again, and in early July, the State Council issued a document again emphasizing the expansion of domestic demand. The major policy of deleveraging by local governments, state-owned enterprises and financial institutions has not changed, and it is difficult for infrastructure to perform particularly well

analysts said that after 18 weeks of digestion, the national steel inventory has decreased by 9.27 million tons, a decrease of 53%. At present, the inventory is 8.38 million tons, 510000 tons higher than the same period last year, with a range of 6.5%. At the end of late June, the Steel Association counted that the social inventory of steel mills was 11.42 million tons, maintaining a relatively low level for 40 consecutive days, and the overall pressure was not great

analysts said that in the off-season of July and August, the weakening of seasonal demand caused by the wheat harvest, high temperature and rainy weather, the suppression of higher steel production, and the substantive development of the Sino US trade war had a negative impact on the steel market to a certain extent. However, due to the loose and fine-tuning of macro monetary policy, little pressure on the overall steel inventory, the demand for early rush to work in the northern region for the heating season and various endless environmental protection production restriction policies, at present, the strength of both long and short sides is relatively balanced, and there is a high possibility of steel prices to maintain a narrow range of fluctuations without major sudden negative factors

in addition, analysts also warned that the medium and long-term operation needs to prevent and control risks, and three points that may cause risks need special attention: the input environmental parameters have maintained a high level of steel production for consecutive months and the high capacity release capacity formed in essence; under the background of deleveraging of local governments and financial institutions, the problem of increasingly tight funds for downstream enterprises of construction steel; and under the background of the Sino US trade war, The possible impact on the export of mechanical and electrical products will ultimately affect the demand for plates, special steel and other products

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