Sep 26,2018  Steel Knowledge.

    First, the level of demand. From January to July, the national real estate development investment was 6.59 trillion yuan, an increase of 10.2% over the same period of 2016. The new project start-up and land acquisition area continued to grow, and the real estate data performed brilliantly. In the first half of the year, China's infrastructure investment growth rate declined rapidly. In the second half of the year, the infrastructure investment was short-circuited. The central bank's fiscal expenditures accelerated significantly. The local bond issuance was significantly accelerated. The government and social capital cooperation (PPP) ushered in a new round of development, infrastructure. Investment is expected to bottom out, and many high-speed rail and urban rail projects have been approved, and the growth rate of real estate investment has remained stable. At the same time, in September, during the traditional consumption season, the terminal construction site accelerated the construction rhythm. It is expected that the domestic steel market demand will be further released next month.

    Second, the supply level. The environmental protection policy has been normalized and expanded. In August, the environmental protection group went deep into the 11th city of the plain, and the production of coking enterprises in Shanxi and other places increased. Tangshan, Anyang and other places have reduced emissions due to heavy pollution, and the production of sintering and shaft furnaces is limited to 50%. Relevant documents were issued in Jiangsu Province. Before the end of 2018, independent coking enterprises in the Yanjiang area and the Taihu Lake area were all shut down. Independent coking enterprises in other areas were withdrawn before 2020. Xuzhou shut down all independent ironmaking enterprises before the end of 2018, and the number of steel enterprises was reduced to less than 10. In general, Hebei, Shandong, Shanxi, Jiangsu, Jiangxi and Anhui provinces and other steel companies, coking and other enterprises to limit production of environmental protection, it is expected that the domestic steel market supply is still low next month.

    Third, the cost factor. In August, the national coke price continued to rise five consecutive rounds, with a cumulative increase of 500-550 yuan / ton. The environmental protection of the 11th city of the plains was fully launched. Before the end of September, the environmental protection equipment renovation of the coke enterprises in Shanxi Province reached the standard, and the environmental protection and production limit of the coking industry started to decline significantly. Domestic mines are also subject to high pressures in environmental protection policies. The supply of resources in Hebei and other places in the main producing areas has decreased, and most middlemen are reluctant to raise prices. The import mine market has recently fluctuated by futures, but although the port inventory has continued to fall, it is still at a high level of 147 million. The demand for ore will shrink further due to environmental protection. Overall, coke continued to rise sharply, and the growth rate slowed down in the later period; the import mine was reduced by demand and the port inventory was under pressure, and the price will be adjusted within a narrow range. It is expected that the domestic steel price will rise steadily next month.

    Fourth, macro factors. Facing the complex domestic and international economic environment, the economy will achieve steady economic growth in the second half of the year. The fiscal policy will be pre-adjusted and adjusted according to the situation, and will serve the real economy more effectively. The growth rate of real estate investment is still good. In the second half of the year, it will increase investment in infrastructure, increase the economic development strategy of the central and western regions, and approve the railway plans of Tibet and Guizhou. The supervision of environmental protection policies continued to deepen, and the tasks of promoting the excessive production capacity of coal and steel were put into practice, speeding up the launch of zombie enterprises and accelerating the merger and reorganization of the coal and steel industry. Sino-US trade frictions have warmed up and trade negotiations between the two sides have continued. On the whole, we will increase our active and prudent monetary policy, fill in the shortcomings of infrastructure construction, resolutely curb rising housing prices, increase environmental protection and force industrial upgrading, and actively strengthen negotiations between China and the United States, so that the economy will continue to show steady growth.

    In summary, the author personally speculates on the trend of rebar prices in Shanghai in September 2018: Steel prices in the July-August period have risen in the low season of traditional consumption, mainly due to the continued high pressure on environmental protection policies. As of the end of this month, the society and steel mills have inventories. Still in the low position. In September, the traditional consumption season has come, environmental protection supervision has been further pressured, and active fiscal policy has increased the growth rate of infrastructure investment. The tight balance between supply and demand in the market will continue to emerge. Considering that in the short-term, the futures will be rushed back and the spot market will be oscillating, but the market is still expected to be good. It is expected that the domestic steel prices will continue to fluctuate upwards in September.

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