Home » Industry News|The steel market welcomes the warm winter, and the downstream bond issuance situation improves. Analyst: demand is off-season, rebound or limited provider Cailian Press

Industry News|The steel market welcomes the warm winter, and the downstream bond issuance situation improves. Analyst: demand is off-season, rebound or limited provider Cailian Press

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© Reuters. Industry News|The steel market welcomes the warm winter and the downstream bond issuance situation improves. Analyst: demand is off-season, rebound may be limited

According to the Financial Associated Press (Shijiazhuang, reporter Zhang Liangde), after several consecutive days of rising, steel prices ushered in a correction on Friday. Spots in various parts of the thread fell slightly by 30-50 yuan per ton, and the main futures contract fell by 2.52%. The immediate reason for the rebound in prices of threaded and black bulk commodities in this round is the improvement in bond issuance by real estate companies. In November, the scale of domestic bond issuance by real estate companies exceeded 42 billion yuan, an increase of 80% from the previous month. The start of real estate is expected to improve slightly. The fifth callback was mainly affected by the lower limit of thermal coal futures. Analysts believe that the short-term steel spot market enters the off-season, and the rebound may be limited, and investors in the futures market need to consider the factor of cash entry discounts.

The demand side welcomes a cold winter and welcomes the warmth. Steel prices have stopped falling and rebounded. Recently, the regulatory authorities have repeatedly released their attitudes to the relaxation of the financing environment for real estate companies on various occasions. The reasonable funding needs of the real estate market are being met. The cold winter ushered in a touch of warmth. Steel prices have rebounded for many days since last Wednesday. The price of 12 rebar in Tangshan has increased by about 500 yuan/ton from the lowest price on the 16th. The price of the main futures contract rose by more than 10% to the highest on Thursday. Market sentiment has recovered and prices have stopped falling. And rebounded slightly.

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Gan Xiayong, an analyst at Shanghai Steel Union Steel, told the Cailian News that this round of spot market steel prices stabilized and rebounded mainly due to three reasons: “First of all, the recent real estate policy has gradually eased, the margin of funds has improved, and the market’s expectations for real estate policies have improved. Secondly, after the sharp drop in steel prices in the previous period, the market’s bearish sentiment was basically released, and merchants began to frequently enter the market to buy bottoms. Finally, from the supply and demand data, the supply continued to be at a low level, while the inventory maintained a downward trend, and the consumer resilience was strong. Form support.”

In addition to supply and demand factors in the futures market, the futures market is also affected by excessive discounts between maturities and long and short positions. Zhao Yu, an analyst at Minmetals Futures, said: “The relaxation of real estate financing is the basis for this round of market rebound. Market demand is expected to improve under the warm policy wind. At the same time, the current market basis is relatively large. Expectations are overly pessimistic, and futures contracts have more discounts compared to previous years. After the market’s pessimism eased this time, the futures discounts began to be repaired and prices began to rebound.”

In addition, Zhao Yu said: “This year’s main thread contract positions remain high for a long time and is also a hot spot in the industry. The long and short parties were more insistent in the early stage. After the downstream expectations improved, industrial customers without delivery capabilities began to reduce their short positions, which also helped. Prices have rebounded.”

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As for the fall in steel prices on Friday, analysts believe that it is mainly due to the news that the National Development and Reform Commission’s Price Department once again conducted a survey on the coal market price formation mechanism.

Before the market enters the off-season, the rebound may be limited. On November 10, there were rumors that “Shenyang lifted purchase restrictions” on the Internet, which boosted the market prices of real estate stocks and steel in the short term. The increase in steel prices was mainly due to the expected improvement in bond financing of real estate companies. However, analysts have expressed a cautious attitude toward the outlook for steel prices.

Zhao Yu, an analyst at Minmetals Futures, believes: “Although the real estate financing side has a trend of relaxation, the cycle of funds from the financing side to the real estate company and then to the steel market will be longer. At the same time, the real estate control policy should exist for a long time. A slight relaxation on the financing side is just a touch of warmth in the winter for real estate, but it is not that spring is here, and the policy is only a marginal improvement.”

Zhao Yu said: “Although the real estate bond financing has been relaxed this year, the overall housing prices have stabilized slightly this year. It is difficult for consumers to reverse this trend in a short time. The sales side of real estate companies has not yet recovered, which still affects the terminal demand for steel. “

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The supply side and cost factors have little impact on the increase in steel prices. Zhao Yu said: “On the supply side, the current production restriction, increase in production and the expected resumption of production are intertwined. The Beijing area has gradually begun to restrict production, while most other regions have completed In addition to the annual crude steel reduction task, many companies’ maintenance plans were only until November 30. After the resumption of production in December, production capacity restrictions will be looser, and some companies may have room for and motivation to increase production.”

Gan Xiayong, an analyst at Shanghai Steel Union Steel, also said: “This round of stabilization of steel prices is not supported by upstream costs, but mainly due to the improvement of downstream consumption expectations.”

Regarding the market outlook for steel prices, Gan Xiayong believes: “The current steel market is gradually entering the low season of consumption, and there is still room for further decline in the spot price of construction steel. However, taking into account the production costs of steel mills and the winter storage costs of merchants, winter prices remain low and fluctuate as a whole. “

On the other hand, due to the discount of futures, futures may perform slightly better than the spot market. Zhao Yu believes: “The futures market will continue to focus on the logic of restoring the basis. In line with the expected improvement in terminal demand, the market may rise slowly. However, if the market rises too fast and exceeds the downstream winter storage price expectations, then Quotes may be repeated.”

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