Weekly review
This week, the main rebar contract has been switched to 10 contracts, the price stabilized and rebounded after the rapid decline to the 3400 mark, and was blocked by the shock finishing near 3550 in the upward rush, and the end of the pre-holiday fell back again, greatly increased the volume, and the weekly K-line closed with a long upper shadow line of the small yang line; With the rebound of blast furnace operating rate and molten iron production at the raw material end, the pressure of 'negative feedback' is expected to be eased, but it is still necessary to see the terminal demand continue to convert marginally in April, otherwise the price will continue to be under pressure under high inventory pressure;
Supply and demand analysis
1. Demand: The average daily turnover of construction steel in the pre-holiday replenishment demand driven by the rebound, the apparent demand fell slightly, still maintained around 2.8 million tons, with the temperature warmer and the improvement of the financial situation, the recovery of demand is expected to be amplified, April will gradually verify the quality of the demand cash, pay attention to the apparent demand after the holiday can be further higher, short-term attention to the marginal change in the weekly apparent demand.
(Figure: National average daily trading volume of construction steel Data source: Mysteel)
(Figure: Weekly apparent demand for rebar Data source: Mysteel)
2. Supply: Rebar output continued to rise slightly to above 2.1 million tons this week, the operating rate of blast furnaces rose, the output of hot metal rose slightly by 2.23 million tons, the operating rate of electric furnace steel mills continued to weaken, the inventory of steel mills continued to go to the warehouse rapidly, the price of raw materials was weak, and the profits of steel mills continued to be repaired marginally.
(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 went to the warehouse 345,000 tons, the steel mill inventory went to the warehouse 288,000 tons, a total of 633,000 tons, the inventory to the warehouse still maintains a fast speed, it is expected that with the further recovery of demand, and the weak supply of steel mills in the case of limited profits, the inventory will continue and accelerate under the state of increasing supply and decreasing, and pay attention to the marginal changes in weekly inventory.
(Figure: Rebar Social Inventory Data source: Mysteel)
(Figure: Rebar mill inventory Data source: Mysteel)
Investment strategy
Rebar 10 contract bottomed out again this week, but the rebound was weak, near 3550 that was under pressure to fall back shocks, but also before the pre-holiday close sharply dived to around 3460, basically giving up the rebound gains, pre-holiday hedging and raw material prices continue to decline and other factors driven, after the holiday is expected to continue to be a wide range of shocks; Therefore, it is not recommended to be overly bearish on the price of rebar, pay attention to the marginal changes in the supply and demand structure in the short term, especially whether the apparent demand can continue to repair upward, and pay attention to the opportunity to lay out the rebar on the dip in the middle line, and pay attention to the take-profit and stop-loss.