Since 2024, the prices of steel products represented by rebar and wire rods have continued to fall, posing a great challenge to the daily operations of steel mills and midstream and downstream processing companies. On the spot side, the Mysteel construction steel price index fell from 4,100 points at the beginning of the year to the latest 3,590 points, a drop of more than 12%; on the futures side, the rebar 2405 contract fell from 4,000 yuan/ton at the beginning of the year to the current 3,460 yuan/ton, a drop of about 13% .
The industry believes that with the slowdown of urbanization and the shift of economic growth model from investment-driven to consumption-driven, the steel industry has entered an era of stock game. Since the beginning of this year, steel demand has been slowly released, which has greatly suppressed steel prices. Whether it is steel mills or traders, the current inventory pressure has increased, and it is even more necessary to rationally use derivatives such as futures and options to manage the risk of price fluctuations.
Zhao Hongping, an analyst at the Black Division of Yide Futures, said that there are three main reasons why steel prices are under pressure this year: First, the price of steel raw materials has fallen sharply unlike previous years due to oversupply, and cost support has weakened; Second, in order to prevent debt risks, infrastructure and real estate projects generally started late this year. As a result, demand is still unable to support supply despite a significant reduction in rebar supply; third, seasonal inventory accumulation in winter, inventory supply superimposed on production supply, leads to seasonal Sexual supply imbalance.
"These three reasons have led to the continued decline in steel prices. The essence is the structural imbalance in the steel industry caused by the change in supply and demand relations after the macro policy shifted to high-quality development." Zhao Hongping said.
According to institutional observations, the current rebar price is the result of the joint impact of macro expectations and upstream and downstream supply and demand in the industry, and the valuation may already be at a reasonable level. Shi Shi, chief analyst of the Minmetals Futures Research Center, said that currently steel mills have taken corresponding production reduction and maintenance measures, and the weekly output of rebar has been at a historical low. With the seasonal improvement of demand in the later period, inventory is expected to continue to be reduced, and it is expected that Prices will also stabilize.
For industrial chain enterprises, in the medium to long term, building materials such as rebar may be trapped in the real estate adjustment cycle for a long time, and the trend of weak prices will not be easy to completely reverse. In this context, upstream and downstream steel companies need to make full use of the price discovery and risk hedging functions of the futures market, do a good job in hedging, and assist companies in their stable operations.
Qiu Yuecheng, director of black research at Everbright Futures, said that under the current situation, both steel mills and traders are facing tremendous inventory pressure. Under the current circumstances, the rational use of futures, options and other derivative instruments to manage the risk of price fluctuations is crucial to the stable operation of enterprises, and enterprises should make reasonable use of them.
"In this round of decline, some steel production companies have achieved good hedging effects in value-preserving operations. Some steel production companies have used rebar futures to reduce losses by nearly 50 yuan/ton, which reflects the role of rebar futures in hedging price risks for steel production companies. Function." Zhao Hongping told reporters.
Zhao Hongping believes that based on the characteristics of cyclical industries, companies should use futures tools to manage risks. On the one hand, many companies currently use rebar futures prices as the basis for pricing to provide pricing services to upstream and downstream customers. Futures prices can well reflect the current market situation; on the other hand, the futures market embodies good risk management functions. Taking the rebar 2405 contract as an example, the rebar futures price has been higher than the spot sales price for a long time this year. This pattern provides companies with good risk management opportunities.
