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Steel transaction volume increased significantly, while environmental protection production restrictions remain unchanged.
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Published Time:
2020-07-10
This week, steel mills' inventories decreased slightly, with a significant increase in transaction volume, while social inventories increased. Social inventories of the five major steel varieties increased this week, increasing by 35,900 tons week-on-week to 9,982,300 tons. Among them, rebar inventories decreased by 56,400 tons to 4,322,200 tons.
This week, steel mills' inventories decreased slightly, transactions increased significantly, while social inventories increased. This week, the social inventories of the five major steel varieties increased slightly, increasing by 35,900 tons week-on-week to 9.9823 million tons. Among them, rebar inventories decreased by 56,400 tons to 4.3222 million tons, while wire rod and plate were the main varieties with inventory accumulation, increasing by 59,100 and 36,300 tons respectively to 1.3787 million and 999,100 tons; in terms of steel mill inventories, a slight decrease was seen this week, decreasing by 22,400 tons week-on-week to 4.3367 million tons, of which construction steel inventories increased by 5,300 tons week-on-week to 2.3593 million tons, while plate inventories decreased by 27,700 tons week-on-week to 1.9774 million tons. In terms of steel transaction volume, Mysteel statistics show that the average daily transaction volume of 237 distributors nationwide was 193,500 tons, a significant increase of 21.98% week-on-week.
The heating season production restriction plan will be announced, and the intensity of steel production restrictions remains strict. Mysteel's survey of 163 steel mills shows that the blast furnace operating rate is 67.54%, an increase of 1.24% week-on-week, and the capacity utilization rate is 83.78%, an increase of 0.87% week-on-week. According to information released by the Ministry of Ecology and Environment, the "Action Plan for Comprehensive Governance of Air Pollution in the Autumn and Winter of 2018-2019 in the Beijing-Tianjin-Hebei Region and Surrounding Areas" has been approved and is about to be announced. According to the requirements of the Action Plan, the 2+26 cities around Beijing-Tianjin-Hebei will implement staggered production from October 1, 2018 to March 31, 2019, with key cities restricting steel production by 50% during the heating season and other cities restricting production by no less than 30%. On September 6, the Tangshan Municipal Construction Key Work Conference materials clearly required that steel mills that stopped or restricted production in August should not resume production in September without authorization, and 14 steel mills that resumed production without authorization were named and criticized. This shows that the current environmental protection and production restriction measures are still quite strict, and the release of steel supply is limited.
Steel profits remain high. According to our industry profit calculation model, the gross profit of rebar this week is 1291 yuan/ton, and the gross profit of hot-rolled coils is 1168 yuan/ton, an increase of 103.42 yuan/ton and a decrease of 7.69 yuan/ton respectively. Currently, the enforcement of environmental protection and production restrictions is relatively strict, and steel supply remains limited, while demand remains strong during the off-season, and overall inventory reduction is good; although the recent increase in cost prices has put some pressure on per-ton steel profits, the traditional peak season for steel is approaching in September, and steel prices are expected to remain high in Q3, and the high profitability of steel and steel mills is expected to continue.
Infrastructure projects to make up for shortcomings in the second half of the year may boost steel demand, and the steel market outlook is strong. Domestic steel demand has been relatively resilient this summer, with inventory reduction and transaction volume data both performing strongly. The recent Politburo meeting proposed to make up for shortcomings in infrastructure construction, which may further boost the demand for steel from infrastructure construction in the second half of the year. It is expected that with the arrival of the traditional peak season, steel demand will further increase, coupled with environmental protection and production restrictions on the supply side, the steel market outlook is strong.
Maintain "Recommended" rating for the industry. It is suggested to pay attention to high-elasticity targets: Hualing Steel, Liugang Shares, Sangang Min Guang, Shaogang Songshan, Magang Shares, Nangang Shares, and Xingang Shares.
Keywords:
Steel,Steel mill
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