During the Spring Festival holiday, the overall performance of international commodities represented by crude oil and London copper was strong, while domestic tourism, movie box office and other data were also strong, making the market optimistic about the spot price of domestic steel after the holiday. On February 18, the steel spot market ushered in a good start as scheduled, but rebar and hot-rolled coil futures showed a high opening trend on the first trading day after the festival, and the final rebar and hot-rolled coil main contracts closed down 1.07% and 0.88%, respectively, and the intraday amplitude was more than 2%. For the unexpected weakness of steel futures after the holiday, the author believes that the main reasons may lie in the following two points: The momentum of the stock market rebound has weakened. Looking back at the market since the beginning of the year, rebar and A-shares are the same two types of assets that are greatly affected by the macro economy, and the price trend of the two shows A strong correlation, and A-shares obviously occupy A dominant position. From the beginning of the year to the beginning of February, the Shanghai Index continued to adjust, and rebar futures followed the adjustment, but the amplitude was much smaller than the stock market. Since the Shanghai index bottomed out on February 5, the rebar plate has also stabilized and rebounded, and the rebound is also less than the stock market. From February 5 to February 19, the Shanghai Index rose 275 points, and after the recent rapid rebound, it has approached the 60-day line of strong pressure, and the resistance to continue to break upward in the short term has increased. In this context, steel futures continue to follow the A-share power weakened, before the festival to reduce the short order to leave the market added back, the disk from up to down.
Supply and demand in the weak stage is still in the off-season of steel consumption, coupled with the impact of the Spring Festival holiday, steel demand is still at its lowest point in the year. According to the experience of previous years, in the next 4-5 weeks, the total steel inventory will continue to accumulate seasonally. Although the current hot-rolled coil and rebar inventory under the Gregorian calendar perspective are low year on year, if the Spring Festival factor is taken into account, that is, from the lunar perspective, the total inventory of the latest rebar survey statistics is 10.5672 million tons, an increase of nearly 9.93% over the same period last year, the inventory pressure of hot-rolled coil is slightly smaller, the latest total inventory is 3.885 million tons. The year-on-year increase was 5.85%. Before the demand really starts and the inventory is removed, the high inventory of steel may hinder the upward price. From the situation of previous years, the rise in steel prices after the Spring Festival usually comes from the macro expectation level rather than the fundamentals, and this year is expected to be no exception.
Although steel futures failed to get off to a good start on the first trading day after the festival, the author is still optimistic about the price trend of steel, especially rebar, in the later period. At the macro level, in the context of the current overall pressure on economic growth, the market's expectations for the power of macro policies are strong, and in the case of relatively flat fundamentals in the short term, strong expectations are expected to become the main logic of market trading. At the supply and demand level, steel supply and demand will continue to recover after the festival, and it is necessary to pay attention to the recovery speed of supply and demand, and the difference between the two may become the focus of the next market long and short game. Also from the lunar perspective, the current rebar cycle production is 15.44% lower than the same period last year, and the hot rolled coil cycle production is 3.28% higher than that of the same period last year, and it is estimated that the current steel director process rebar and hot rolled coil production profit is -59 yuan/ton and -93 yuan/ton, and the average profit of electric furnace is -90 yuan/ton. The low profit level will limit the steel mill to resume production and raise production willingness, so the author believes that there is a greater probability that the demand for rebar will recover faster than the supply after the festival, and the overall low steel supply has led to a slower accumulation during the Spring Festival. On the whole, due to the weakening of the momentum of the steel futures to follow the A-share rebound, coupled with the insufficient upward drive of the supply and demand side of the price, the steel price opened high and fell. With the macro strong expected trading or heating up again, the recovery of superimposed steel supply speed lags behind the recovery of demand, especially the low supply status of rebar will pull down its post-saving accumulation slope, steel prices are expected to usher in a rise.
