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Threaded steel good has been overdrawn

At present, threaded steel futures show a narrow oscillation trend. Last week the 2005 contract rose 3.18 percent to 3,441 yuan a tonne. On the spot side, Shanghai rose 20 yuan/tonne to 3440/tonne, Guangzhou fell 30 yuan/tonne to 3780 yuan/tonne and Tianjin fell 70 yuan/tonne to 3340 yuan/tonne.

Limited degree of rehabilitation in various places

Recently, all parts of the country are in the midst of a succession of work. As of March 8, coal consumption from power generation has returned to a normal 70.9 percent, the number of passengers in the country is about 18.8 percent in the same period last year, the absolute number is maintained at 20 million, the national zero-load logistics has returned to 55.5 percent last year's peak season, the national vehicle logistics has returned to 69.8 percent last year' peak season, and the cement capacity utilization rate is 33 percent.

Comprehensive analysis of the above indicators, there is some progress in the resumption of work. Coal consumption and logistics recovered more quickly, but workers associated with the construction industry returned and cement consumption recovered significantly more slowly. Full re-entry is expected until mid-to-late March, while return to high-intensity construction is expected to take place after April.

Short-process steel supply picks up

Last week, the actual utilization rate of blast furnace capacity was 79.3%, down 0.4 percentage points month-on-month. Zhou iron and water production decreased by 0.7 million tons, while the output of the five major varieties rebounded by 50,000 tons. Long-process steel mills have been affected by a reduction in profits and high inventories, resulting in a degree of passive production reduction. Whether further production cuts will be reduced in the future should depend on whether steel mills' profits and logistics are smooth. At present, steel mill profits are still shrinking, iron ore prices are relatively strong, and coking raw materials are close to the cost price, the overall profit compression space is limited. Therefore, the future does not rule out the possibility of further production cuts in steel mills.

In terms of electric furnaces, the capacity utilization rate of 53 independent arc furnaces was 7.68 percent, up 4 percentage points month-on-month. The marginal output of the blanking and electric furnace has been increased to a certain extent, which also brings a certain increase to the supply of rebar.

The destocking rate is slow

This week, the rebar inventory further accumulated, the total inventory has exceeded 21.5 million tons, the future probability of 22 million - 24 million tons. In April, if apparent demand increases by 10% from previous year's peak and production remains at the same level as the same period last year, the volume of rebar days will not return to normal levels until after September. The current inventory pressure is undoubtedly enormous.

The sharp rise in the price of rebar after the Spring Festival was mainly driven by optimistic expectations. First, the outbreak can be brought under control in early March, and construction sites resume work as scheduled. Second, after the resumption of work by the impact of the market rush, steel demand will appear compensatory consumption, can achieve rapid de-ization of inventory. Third, in order to hedge the impact of the epidemic on the economy, the state will introduce hedging policies, increase investment in infrastructure and real estate restrictions on the marginal relaxation of the policy, which will lead to improved demand for steel. But in fact, the current return to the city passenger flow is limited, it is difficult to support march to achieve high-intensity resumption of work. And the so-called real estate stimulus policies introduced around the market are also mainly to hedge the outbreak, mainly to protect the cash flow of real estate enterprises, and the main real estate restrictions and financing restrictions on housing enterprises have not been relaxed.

All in all, the current rebar price has overdrawn the market's optimistic expectations, and once the fundamentals are expected to deviate, the price of rebar will be under pressure downwards.

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