Steel: the demand trend will dominate steel prices, prices will come under pressure – Futures Daily – Hanfeng.com



2018-10-01 08:15:27 Source: Futures daily

After the steel price recovered in September, it fell back. The logical trend is clear: firstly, the news that the Tangshan area continued to limit production in September and the steel companies in Shanxi halted production restrictions stimulated the steel price recovery. In mid-September, the production limitation for environmental protection was "relaxed". The news has changed the expectations of the entire market: the macro bearish party has once again become the short-selling force that everyone expects. The market is now awaiting the decline of the most important economic data in August, and the actual data and the Market expectations for the decline in real estate investments differ strongly. Steel prices played an important role in real estate investments and sub-indices performed well, combined with low inventories and higher-term premiums, steel prices rose. At the end of September, it began to fall sharply under the rumors about the cancellation of pre-sales of real estate. At the same time, the increase in steel stocks and the increase in the stock of steel plants increased the power of the decline.

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What will happen to the later steel phase? We believe that the demand trend will dominate the steel price, that the price will maintain a broad oscillation before mid-October and that the probability of a weakening demand will increase after the end of October and the price will be under pressure.

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Macro data fell slightly, and pessimistic expectations in the fourth quarter were strong.

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The economic figures in August have declined slightly and show some degree of resilience. The added value of industrial enterprises above the designated size grew by 6.1% year-on-year, with the downturn in the previous period continuing and to a certain extent reflecting declining demand. National fixed-capital investments increased by 5.3% on an annual basis, an historic low. The contribution of real estate in investments is still excellent, the growth rate of infrastructure is lower than expected and investments in production are slowly increasing.

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In August, the RMB loans increased by 1.28 trillion yuan, a year-on-year growth of 13.2%, an increase of 183.4 billion yuan on an annual basis, and the new increase was lower than the market expectations of 1.4 trillion. In August, the amount of social finance increased by 1.52 trillion yuan, a growth rate of 10.1%. The return to a new month was greater than the credit, and the social security data showed stability. The rate of growth of budget expenditures was in fact flat on the low point of the previous month and the financial expenditure for infrastructure works rose slightly. Whether financial or social, it is currently stable, but does not show any expansion.

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The FOMC meeting of the Fed in September decided to increase the benchmark rate by 25 basis points to 2.0% -2.25%. The Fed is of the opinion that since the August meeting on interest rates the US labor market has remained strong and economic activity has continued to grow. Compared to the last meeting of the interest rate meeting, the Fed has removed the statement that "the position of monetary policy is still free". The Fed has increased its economic forecast and expects to raise interest rates in 2018. It is expected that interest rates will rise three times in 2019 and that interest rates will increase once in 2020. In general it is not necessary to follow the interest rate increase in China and the impact on the market is limited.

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The demand will dominate steel prices

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The "leisure" news about environmental protection and production restrictions in mid-September was clearly negative for the price and the steel price fell sharply. The relevant telephone records from the Ministry for Environmental Protection stated that the Ministry of Environmental Protection did not need specific production limits. The latest "Beijing-Tianjin-Hebei and surrounding areas 2018-2019 autumn and winter air pollution comprehensive treatment difficult action plan" announced, and the previous signing is not much different. According to the plan, the goal of "double down" for PM2.5 and heavy pollution days in Beijing-Tianjin-Hebei and the surrounding areas will be changed from 5% to 3%. High-emission industries such as iron and steel, building materials, coke, foundries, non-ferrous metals, chemical industry, etc., The plan has canceled the uniform ratio of limited production, and the production of peak-to-peak production is suitable and differentiated management is implemented It is strictly forbidden to be "one size fits all" according to the monthly ambient air quality during the heating period. Predicting the forecasting results can shorten or extend the peak production time.



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