Ferrous metal weekly report: steel production pressure gradually showing steel prices will be under pressure to run
Last week's market summary
Steel: on the supply side, the weekly output of rebar increased to 3.3069 million tons on a month-on-month basis, a substantial increase of 5.84% year on year in 2018, with an increase in the range; Among them, rebar production in east China increased the most obviously, with a year-on-year increase of 10%. At the same time, the operating rate of tangshan blast furnace increased by nearly 3 percentage points to 53.97%, and the output of rebar in hebei increased by 8.79%, and the output of thread increased by about 9% compared with that of the same period last year.
After the northern weather pollution improved and the successful conclusion of the national conference, the environmental protection production limit of the increasingly strict blast furnace and sintering furnace was eased, and some steel mills gradually began to resume production. The profits of steel tons expanded last week due to the decline in iron ore prices, and the production of long process threads began to rebound. Last week, the total cost of rebar scrap furnace in east China was maintained at 4017 yuan/ton, the lowest in central China at 3699 yuan/ton, and 3970 yuan/ton in south China. The national average cost fell to 3892 yuan/ton in a small range, compared with the spot market price of rebar, the profit space is gradually opened, the probability will continue to recover. At present, the production pressure is relatively large. Inventory structure, rebar 35 city social inventory last week reduced by 5.78% month-on-month to 9.1694 million tons, the rate of destocking month-on-month continued to increase compared with the previous two weeks, 11.57% less than the same period last year; Since march, steel social inventory ushered in the third week of accelerated decline, in which the southwest, east and central China rebar social inventory destocking speed has been significantly improved; Demand is gradually picking up in Shanghai and hangzhou, down 5.68 per cent and 7.77 per cent, respectively, last week.
On the demand side, the beginning of construction projects since march and post-holiday construction recovery is relatively good. The real estate data from January to February showed that although the growth rate of real estate development investment was still high, the growth rate of new construction area fell, and the negative land area purchase showed that the real estate investment lacked driving force in the later period. But there is support for the short term. Similarly, january-february based investment growth was 2.5 percent, supporting steel prices. It is expected that after the gradual stabilization of inventory destocking, production pressure will put steel prices under some pressure.
Iron ore: on March 19, VALE officially announced that it had received documents from the state inspectorates office of MinasGerais approving the resumption of operations at its Brucutu mine and Laranjeiras tailings dam, as well as approval from the ministry of environmental protection to resume production. Up to March 15, the total shipments of iron ore from Australia to Brazil rose by 750,000 tons to 20.771,000 tons, a sharp decrease of 7.49% compared with the same period last year. The shipments from Australia rose by 1.18 million tons to 16.201 million tons, a decrease of 8.59% compared with the same period last year. Shipments from Brazil fell 430,000 tons to 4.57 million tons for the second week in a row, down 21.11 percent from a year earlier. Shipments from Brazil and Australia continued to decline significantly from the previous period.
Last week, vale announced that it had been granted immediate permission to resume operations at its guaiba Marine terminal in mangalatia, and iron ore shipments in Brazil are expected to resume. In the short term, the inventory and daily consumption of sinter ore powder steel mills are at historically low levels. After the end of the environmental protection production limit in the heating season, steel mills and part of the bf under maintenance will gradually start to resume production. There are steel mills' replenishment expectations in the market, which support the iron mine 05 contract, while the far month contract is relatively weak.
Last week, the price difference between may and October narrowed from 279 to 256, still a high deviation from the same period in the year-on-year history. The price difference between October and January for threads widened from 175 to 183. 05 contract snail price increased from 6.0 to 6.1,10/09 contract snail price increased from 6.0 to 6.2. The screw spreads 05 contract rose from -90 to -56 last week, while the 10 contract rose from -51 to -47, both at historically low levels.