1、 Review of the market
Domestic steel prices fell in June 2021, and as of June 25, the steel index closed at 5090, down 180 from the end of last month.
In June, the domestic steel price market entered the mode of shock, and the price fell after the price rose. Specifically, in the first ten days, the domestic construction steel price ushered in a restorative increase under the boost of demand release and capital market speculation; In the middle of the year, the price was pushed to the highest in the month, and then the demand end quickly weakened. At the same time, the crude steel production was innovated again, the turning point of domestic building materials inventory appeared, and the spot price quickly returned; In the late days, with the withdrawal of speculative funds, the black series commodity futures have been adjusted, and the market price has further declined due to the shortage of funds in the near half year.
2、 Supply analysis
1. Analysis of the current situation of domestic steel stock
According to the monitoring inventory data, as of June 25, the total inventory of major steel varieties in China was 14.6871 million tons, up 31.1 tons, an increase of 2.2% compared with the end of May, an increase of 233600 tons, an increase of 1.6% compared with the same period last year. The inventory of thread, wire, hot rolling, cold rolling and medium plate are 7.823 million tons, 1641400 tons, 27634 tons, 1.2664 million tons and 1273600 tons respectively. In this month, except for the decrease of wire stock and the change of cold rolling stock, the stock of other steel varieties has increased to different degrees, among which the increase of thread steel and hot roll is obvious.
According to data analysis, in June, domestic terminal demand performance was depressed, and local volume of transactions fell sharply compared with May. At the same time, the implementation of production restrictions is less than expected, and supply pressure increases without falling. Under the influence of weak supply demand, since the middle of this month, the domestic steel market has entered the inventory cycle again. After entering July, the terminal demand is difficult to enlarge temporarily, while the uncertain factors of the supply end are more, and the output will fluctuate. According to the historical situation, the inventory will be expected to increase.
2. Analysis of the current situation of domestic steel supply
According to the statistics of China Iron and Steel Industry Association, in mid June 2021, the key statistics are that the steel enterprises produced 23.9538 million tons of crude steel, 206611000 tons of pig iron and 22847600 tons of steel. In this ten days, the average daily production of crude steel is 23.954 million tons, with a year-on-year growth of 2.57% and a year-on-year growth of 15.99%; The pig iron is 20661 tons, with a year-on-year growth of 2.16% and a year-on-year growth of 12.60%; Steel 2.848 million tons, 3.80% on month growth and 18.05% year on year growth.
3. Analysis of the current situation of domestic steel import and export
According to the General Administration of customs, China's steel export growth slowed down in May. Specifically, in May 2021, China exported 5.27 million tons of steel, an increase of 19.8% year-on-year, and a 33.9% decrease on a month-on-month basis. From January to may, the total export of steel was 30.92 million tons, an increase of 23.7% year-on-year. In May, China imported 1.21 million tons of steel, down 5.8% year on year, and 2.7% on month growth. From January to may, 6.1 million tons of imported steel were imported, an increase of 11.6% year-on-year.
In May, China imported 8.979 million tons of iron ore and concentrate, an increase of 3.2% year on year; From January to may, China has imported 471765000 tons of iron ore and concentrate, an increase of 6.0% year on year.
In May, China imported coal and lignite reached 21.04million tons, down 4.6% year on year; From January to may, China has accumulated 111166000 tons of imported coal and lignite, down 25.2% year on year.
4. Steel supply forecast for next month
In June, the domestic steel factory production enthusiasm was high, and the daily average production of crude steel of key enterprises increased again; After entering the late ten days, with the steel price callback, the active production limit of the steel plant increased, and the supply pressure decreased. After entering July, under the background of carbon peak and carbon neutralization, the work of controlling production capacity and reducing production volume of steel industry will continue to be carried out comprehensively. It is expected that the phenomenon of reducing production and maintenance of steel plants will increase, thus alleviating the market supply pressure. We expect domestic building materials supply pressure to be reduced in July.
3、 Demand situation
1. Analysis of steel sales trend
In June, domestic terminal demand fell down as a whole, specifically: in the first half of the month, the backlog of demand in the early period was released, and the overall transaction performance was still acceptable; In the next half of the month, with the advent of high temperature and rainy weather, coupled with the end-user funds tight, the transaction performance is light. After entering July, it is estimated that the weak demand situation is difficult to change temporarily. Once the overall sales volume continues to decline, it will drag down the trend of building materials prices.
4、 Cost analysis
1. Cost analysis of raw materials
In June, the price of raw materials fluctuated, with the rise as the main factor. According to the monitoring data, as of June 25, the factory price of common carbon square billet in Tangshan area was 4840 yuan / ton, down 160 yuan / ton compared with the price at the end of last month; The price of scrap steel in Jiangsu Province is 3640 yuan / ton, up 150 yuan / ton compared with the end of last month; The price of secondary coke in Shanxi Province is 2560 yuan / ton, down 120 yuan / ton compared with the price at the end of last month; The price of 65-66 grade dry base iron powder in Tangshan area is RMB 154 / T, up 110 yuan / ton compared with the end of last month; The 62% index of Proctor iron ore is US $214.9/t, up $16.15/t from the end of last month.
Compared with the spot shock correction, the trend of raw material price this month is strong, and the cost center moves upward, which has a strong support role in the price of finished materials.
2. Steel cost forecast next month
The shape of the top of iron ore appears, and the later shock callback is a high probability event; The price of coke is easy to rise and fall due to tight expectation of supply side; The demand of scrap steel is affected by furnace steel, and the price may be adjusted. In general, it is expected that the domestic steel cost will be slightly lower in July, but the space will not be too large.
5、 Macro information
1. The construction of major projects in many places in China is speeding up
Near the end of the second quarter, the construction pace of major projects in many places has been increasing. From the perspective of public disclosure of information from all over the country, investment in high-tech manufacturing industry and other industries has become the focus of investment in various regions. Besides industrial investment, infrastructure investment is still the main direction of local investment. In recent years, the "14th five year plan" construction drawings for comprehensive transportation development in Chengdu Chongqing metropolitan area, Shanghai, Hainan and Zhejiang have been published successively. Several trillion yuan projects will be put on the horse, the construction heat of railway and rail transit will not decrease, and the investment in sea air hub such as airport will also be increased.
2. National Development and Reform Commission promotes the supply and stability of commodities
Recently, the price division of the national development and Reform Commission and the Bureau of price supervision and competition of the State Administration of market supervision and competition sent several joint working groups to relevant provinces and cities to investigate the issue of commodity supply and price stability. While the supervision is in force, the relevant reserve materials are also ready to be released and will be put into the market. Through a series of "cooling" measures, the overheated commodity prices also began to show different degrees of decline.
3. The road map of carbon peak in local Edition
Under the goal of "achieving carbon peak by 2030 and achieving carbon neutralization by 2060", the local version of the carbon peak road map is accelerating to surface. Zhejiang Province has recently issued the action plan for carbon peak carbon neutralization technology innovation in Zhejiang Province, put forward specific technical roadmap and action plan, seize the commanding point of carbon peak carbon neutralization technology, and by 2025 and 2030, high quality will support Zhejiang Province to achieve carbon peak and carbon neutralization successively《 The reporter of economic reference newspaper learned that more than ten provinces and cities including Shanghai, Beijing, Tianjin, Hebei and Shanxi have proposed to issue the relevant plan of carbon emission peak action in this year. From the design ideas of carbon peak scheme disclosed by various regions, it is still a major task to increase the work of "double control" of energy consumption.
6、 International market
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According to the statistics, the rise and fall of international thread steel in June are mutual.
In may2021, the crude steel output of 64 countries included in the statistics of the world iron and Steel Association was 174.4 million tons, an increase of 16.5% year-on-year. Among them: the output of crude steel in China is 99.5 million tons, an increase of 6.6% year on year; India's output was 9.2 million tons, an increase of 46.9% year on year; Japan's output was 8.4 million tons, an increase of 42.2% year on year; The output of the United States was 7.2 million tons, an increase of 47.6% year on year; Russia's estimated output is 6.6 million tons, an increase of 14% year on year; South Korea's estimated output is 6million tons, an increase of 10.5% year-on-year; Germany's estimated output is 3.5 million tons, an increase of 35.5% year on year; Turkey's output was 3.2 million tons, an increase of 42.4% year on year; Brazil's output was 3.2 million tons, an increase of 40.1% year on year; Iran's estimated output is 2.6 million tons, an increase of 7.7 per cent year-on-year.
7、 Comprehensive view
This month, domestic steel market entered the traditional off-season demand. At the demand end, with the centralized commencement of the site closed, the impact of high temperature and rainy weather was added, the demand for steel terminal was weakened as a whole. At the supply end, the effect of production restriction has not been shown, the domestic crude steel production remains high, the supply end has not been reduced, and the supply and demand have changed. Since mid June, the turning point of domestic steel inventory has appeared. At the same time, policy has repeatedly made a sound, relevant ministries and commissions strengthen control, to combat speculation in the steel market, leading to the decline of high black futures, but also negative impact on spot market.
In June, the domestic steel prices showed a downward trend of shock, which was basically consistent with our forecast report trend last month. Looking back, since the top of the steel price in mid May, there have been two waves of downward adjustment, namely, the "touch low" in the late May and the "touch high" in the middle of June. The price fluctuation range is narrowed and the cost support is stronger. After entering July, the market still has some variables.
On the one hand, plum will emerge in the middle and lower reaches of the Yangtze River, but the construction will be affected by high temperature and hot weather, and the demand end is difficult to release temporarily, while the tight capital will be relieved; On the other hand, the production cost is high, the profits of steel mills are suppressed, the enthusiasm of production will decrease, and the supply end pressure may slow down in the later period.
Therefore, in the situation of two-way weakening of both supply and demand, domestic steel prices will maintain a pattern of shock. It is worth noting that the international factors in the later period are variable, and the price of iron ore and other commodities has the risk of falling. Once the raw material price falls, the center of cost support will move down. Generally speaking, after the June shock correction, the demand strength and the raw material price will determine the fluctuation of spot price. We judge the domestic steel price trend in July 2021 as: supply and demand turn weak, and the price is under pressure.
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