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The center of gravity moves rebar

EAST Environmental recent upgrade to limit production, steel strong rise. As of July 28, 1610 the main rebar contract closed at 2480 yuan / ton, compared with the previous day up 75 yuan / ton. Rebar futures contract price than the Shanghai East China region with the delivery of premium brand rebar mainstream market price of 80 yuan / ton.
Steel output continued to decline
As environmental upgrade limited production in July compared with June, China Galvanized Corrugated Roof Sheet production is expected to continue to decline. According to CISA statistics, in mid-July 2015, to participate in production and operation of China Iron and Steel Association statistics Xunbao 150 member steel companies (according to caliber group of 97) average daily crude steel production was 1,647,400 tons, compared with the previous ten days end cut 57,100 tons, a decrease of 3.35%. In mid-July, at the end, members of iron and steel enterprises steel stocks 16,635,100 tons, an increase of 256,100 tons over the previous ten days, an increase of 1.56%.
Since July, the first large-scale emergence of the Yangtze River floods, Jiangsu, Hunan, Hubei some mills produce a certain influence, crude steel production fall. Then late July, will officially enter the Tangshan earthquake 40 anniversary limited production phase, all requirements of steel sintering machine shutdown, the impact on steel production will also be increased. In addition, this year the first batch of central environmental protection inspectors started. As of July 19, the formation of eight Central Environmental Protection Inspectorate has been completed inspectors stationed. From a regional perspective to implement the most stringent, Jiangsu environmental protection department line with the G20 summit, unannounced visits to local mills require shutting down a high degree of pollution IF furnace equipment, the vast majority of small and medium steel mills shut down notice received. Currently mills are mostly shut down during the day, night, production, production decreased by 30% -40%, the resumption of production time temporarily determination.
Overall, this year in the context of the supply-side reforms, sudden, mandatory limit production become the norm, leading to production of unstable supply, an important factor supporting steel prices this year.
July demand chain down
Steel shipments in July MoM weaker rhythm again. From the actual shipping situation, the current level of shipments each microscopic aperture display, steel shipments in July compared with June have signs of weakening. Shipments rhythm, July steel shipments rhythm fluctuations. Shipping good rhythm for one day of rest for 3-4 days. From the stock point of view, when the stock continued to increase after 3-4 days, there will be a strong shipments, thereby reducing inventory, but shipments continued to improve for longer than two days. From the construction site of the actual situation, the hot summer weather hampered the actual demand for the release site, downstream traders replenishment enthusiasm and arbitrage company locks price movements driven by rising demand.
From the social stock, as of July 22, the national total rebar, wire rod, plate, hot-rolled and cold rolled five varieties stock 8.9195 million tons, weekly chain rose to 2.51%, a decline of 27.11 percent year on year. The nation's major cities rebar inventories to 3.875 million tons, weekly chain rose 4.64 percent year on year decline of 33.52%. National total of 1.845 million tons of hot-rolled stock, weekly chain rose to 0.71%, year on year decline of 32.27%. Social Stock WoW significant rebound, short-term supply and demand has emerged. In addition, the impact of a large number of precipitation in North China and East China high temperature and other harsh weather caused demand is also an important reason for stocks to rebound. Stocks turned up by the fall, will also have a certain impact of market confidence.
Increase in the cost of steel
According to the latest estimates the cost of raw materials, the current mainstream molten steel costs in 1300-1350 yuan / ton, last month rose 50 yuan / ton. Rebar full cost in 2000 yuan / ton, hot rolled full cost about 2,300 yuan / ton. At present the steel prices according to different regions, rebar gross profit in the 100-200 yuan / ton, hot rolled gross profit 300-500 yuan / ton range. In mid-July, after the end of the steel pre-overhaul, new blast furnace production, supply rises. Considering the recent environmental impact of steel production, hot metal production chain is expected in August than in July increased by 1% -2%. From the impact of the G20 summit, the Jiangsu Province IF furnace plant has shut down phenomenon, the recent rise in plate, screw and other varieties also reflects the situation Furnace shutdown caused by the relative shortage of supply.
Recent rebar futures because the environmental limit production rose sharply subject of speculation, but persistent yet verified. From the demand point of view, into the downstream demand weakened overall momentum since July, the continuous rainfall in North China and East China high temperatures to curb demand more obvious. From the supply point of view, in July there is still another mill maintenance, Tangshan and East are still cut administrative interference, the overall supply also have a certain degree of contraction. Overall, in the context of the supply-side reforms, the bottom of the center of gravity of steel prices constantly on the move. But considering the past two months, real estate data and fixed asset investment data is not ideal, there is still uncertainty in economic trends in the second half is expected steel prices upward road more twists and turns.

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