The problem of capital chain becomes a "dead hole" of steel traders

Demand volume boosted the rebound of steel prices, but the sluggish downstream demand has determined that its rebound persistence is difficult to last for a long time, and the hedging pressure under the industry adjustment pattern limits the room for rebound of steel prices.

Affected by the improvement of the spot market sentiment, the post-holiday rebar has ushered in a good start, with the main contract 1301 standing on the 60-day line. In the fourth quarter, the author believes that under the pattern of a downturn in the domestic economic cycle and a continuing weak demand for end-users, it is difficult for steel prices to go out of a sustained rally.

The rebound in steel prices should not be optimistic about the recent, at home and abroad in the good stimulus, the steel market demand has increased, the market inventory and steel mills to digest accelerated, pushing rebar prices rebounded. From the weekly purchase volume of the Shanghai Terminal Line, the purchase volume before the holiday was 46,189.08 tons, a week-on-week increase of 60.4%. However, after deducting the factor of restocking before long vacation, the overall market demand was relatively stable, and there was no fundamental improvement in downstream demand. In August, the growth rate of investment in fixed assets in the country fell below 20% to 19.36% for the second time this year. Although the approval of investment projects accelerated under the stimulus policy, the funding problem of investment projects remained the biggest bottleneck for project implementation. The negative growth of income shows the tense situation of funds. In terms of real estate investment, the growth in real estate development investment, sales area, and land purchase area in August witnessed a certain degree of recovery. However, the real estate market is still under severe control and the investment demand in the latter stage should not be overly optimistic.

Rising steel prices will drive steel mills to resume production The latest data from China Iron and Steel Association show that in mid-September, the average daily output of crude steel for key large and medium-sized enterprises was 1.5229 million tons, down 2.73% month-on-month. The average daily crude steel production in mid-September is estimated. It was 1,856,500 tons, down by 2.01% from the previous month. The data fell month by ring. On the one hand, it has a certain boosting effect on market prices. On the other hand, from the point of view of the capacity utilization rate of steel mills, the possibility of underestimation of CISA data is relatively large. In the later period, attention should be paid to the data and statistics of China Steel Association. Is there any divergence in the office data?

Recently, the steel mills resumed production with the increase in steel prices. According to statistics, the operating rate of blast furnaces in the Tangshan area increased from 85% in mid-September to 91% before the holiday. According to market research, most of the steel mills said that the capacity utilization rate is basically maintained at a high level, and some pre-maintenance production lines will be started this month, will increase market supply, and in order to maintain the cash flow, steel mills The willingness to actively reduce production capacity is insufficient. According to the current steel price and cost estimation, the profitability of steel mills will increase, which will inevitably stimulate the enthusiasm for resumption of production. Therefore, the rebound of crude steel production in October is a high-probability event. The problem of overcapacity in the industry is still serious.

Under the industry adjustment pattern, the hedging pressure on the heavy steel market has entered a long-term adjustment cycle, and the industry “big reshuffle” has begun. Under the pressure of competition and survival, steel mills and traders have made every effort to transform their business in order to ensure the normal production turnover of enterprises and obtain a possible profit level. It can be seen that the steel mills have launched various innovative sales initiatives around service production in different time and space, and have endeavored to extend to both ends of the industry chain, such as setting up steel logistics parks, setting up sales outlets everywhere, increasing direct supply ratios, etc. . The capital chain issue has become a “dead hole” for steel traders deeply affected by the credit crisis. Most steel traders have adopted a strategy of steady operation, they do not pick up goods, fast-forward and fast-out, reduce inventory, and reduce sales; some steel mills The first-level agents have made inventory reduction the top priority. Each of these agents will determine the amount of inventory to be digested each month. When the sales volume of steel products does not reach the projected inventory reduction plan, the agents will speed up the shipment through price reduction. Speed, when stocks drop to the expected target, agents will not ship a lot, wait until steel prices rise and sell.

In other words, under the pattern that the current market supply is far more than demand, how steel mills and traders increase their sales and maintain profit is their most critical demand. Therefore, the certain profit margin provided by the rebound in steel prices will stimulate steel mills and traders to sell their hedging kinetic energy. A heavy market pressure will limit the rebound of steel prices.

To sum up, under the replenishment of inventory dynamics, market demand has boosted the rebound of steel prices, but the downturn in downstream demand has determined its sustainability is hard to be optimistic. The increase in market demand is far from matching the release of supply, and the industry adjustment pattern Heavy hedging pressure limits the room for rebound of steel prices, and the broad market oscillation will become the main tone of rebar operation.