Weekly review
This week, the main rebar contract fell sharply again after the 3600 shock and pressure, and fell below last week's low to hit a new low in the near future, testing the support near the 3400 mark, sharply reducing the position and shrinking the volume, and the weekly K-line closed more than 200 points of the physical big black line; %, the 'negative feedback' drive strengthened again, the Wenhua black chain index continued to show a bearish trend; the main rebar contract has completed the position change month this week, and the main contract will be completed next week to change the month, and the 10 contract will be more based on expectations for the game, the fundamentals of rebar supply and demand are expected to continue to show a weak pattern of supply and demand, and the market will game the expected difference between supply and demand changes, and short-term rebar prices are expected to continue to fluctuate and bottom out.
Supply and demand analysis
1. Demand: the average daily volume of construction steel in the country has declined, the apparent demand continues to rise, and has now risen to above 2.8 million tons, which has gradually approached the level of the same period in two years.
(Figure: National average daily trading volume of construction steel Data source: Mysteel)
(Figure: Weekly apparent demand for rebar Data source: Mysteel)
2. Supply: Rebar production continued to fall slightly below 2.1 million tons this week, the operating rate of blast furnace and electric furnace decreased slightly, the output of hot metal remained around 2.21 million tons, the inventory of steel mills accelerated to the warehouse, and the profits of steel mills continued to repair marginally after the price of raw materials fell sharply again.
(Figure: Rebar production Data source: Mysteel)
(Figure: Blast furnace operating rate Data source: Mysteel)
(Figure: Electric furnace operating rate Data source: Mysteel)
(Figure: Average daily output of molten iron of 247 iron and steel enterprises Data source: Mysteel)
(Figure: Gross profit per ton of rebar Data source: Mysteel)
3. Inventory: This week, the rebar inventory accelerated to the warehouse, the social inventory to the warehouse 363,000 tons, the steel mill inventory to the warehouse 353,000 tons, a total of 716,000 tons, the steel mill inventory accelerated to the warehouse at the same time the social inventory to the warehouse continued to amplify, and with the further recovery of demand, as well as the weak supply of steel mills in the case of limited profits, the inventory to the warehouse will continue and accelerate in the state of increasing supply and decreasing, focusing on the marginal change of weekly inventory.
(Figure: Rebar Social Inventory Data source: Mysteel)
(Figure: Rebar mill inventory Data source: Mysteel)
Investment strategy
The main rebar contract switched to 10 contracts, this week's high and falling, accelerating the decline after breaking through the 3600 mark, and continuing to decline after the 3500 mark, from the price trend after 2020, there is strong support near 3450, but this round of decline is driven by the weak demand after the real estate cycle turns to cause the supply of steel mills to decline, which leads to a sharp decline in the price of raw materialsTherefore, the key to driving the price in the market outlook is still the recovery space of the terminal consumer demand for finished products and the repair and adjustment of the supply and demand structure of the raw material end; short-term rebar is still focused on the recovery of terminal demand, if the inventory can continue to go to the warehouse rapidly, the recovery of hot metal production of steel mills is expected, in the case of the price valuation has been in a neutral low level position, it is recommended to be cautious to chase short, and can still wait for more participation opportunities after the bottom is stabilized.