February crude steel reached a record average daily output of 1.799 million tons, output growth exceeds demand growth, consumption, improved steel inventories remain slightly under last week's increase in steel prices and the period of relatively strong recent performance. The author believes that the domestic steel shipments to reduce costs and is the main reason for rising steel prices supported by short-term, post-and sand Baosteel steel price policy will have fueled the introduction of the role, but because of inventory turning point has been delayed, would make the latter part of the price increases faced by some pressure.
Defer domestic steel stocks turning point
The recent steel price increases the real power comes from steel mills to reduce the amount of supply of traders. Steel side believes that a substantial increase in steel costs, post-there is room for price increases, while easing the pressure on stocks. The supply of steel market circulation decline, leading to partial and temporary imbalance between supply and demand. Once out of the upward trend in prices, end-orders will be more enthusiastic, because the downstream manufacturers in the latter part of the price adjustment is expected to move into the steel mill, it will increase the order quantity to reduce future costs. The author believes that supply steel to reduce the amount of traders, it may lead to inventory turning point has been postponed in previous years, three stocks turning point in mid to late this year or early in April drag.
Raise the cost of supply and demand is still
From a cost perspective, Australian ore and Brazilian ore rate of increase has exceeded 40%, Indian spot ore prices have more than 50% is for domestic, import prices continued to rise outside the mine pressure on the cost of steel, so that domestic steel mills unwilling to accept more than 40% of ore price increase. But the domestic ore price with foreign ore prices upward, the recent 66% of Handan powder prices have risen to 1,120 yuan / ton. At the same time, billet prices are also rising, Handan Q235 billet price to 3670 yuan / ton, the recent billet and scrap steel prices are the rise, Handan steel scrap prices have reached 2820 yuan / ton, Shenyang price of 2950 yuan / ton . Recent metallurgical coke prices have come down slightly, mainly due to previous bad weather led to poor transport of coke stocks higher. Steel profits rising costs led to break-even point is close to the vicinity of prices has been a lack of motivation. However, overall supply and demand imbalance, the late rise in the price there is a certain degree of difficulty.
Arbitrage traders hedging activity
Under the pressure of the credit tightening, some traders will cash in there, in a gradual increase in steel prices, select a reasonable price to the early realization of the stockpile, while higher prices of futures and electronic trading to a certain extent, or period when hedging is arbitrage. As in previous years, low price of produce in the vicinity of October, so in October the contract to become a natural hedging contracts.
The author believes that the recent shift warehouse Quotes after the end of October the pressure of the contract to be much larger than the other contracts. Futures spreads from the disk structure of the current terms, Rb1005 close to delivery because of the month, and because the shift position has basically ended, the pre-cast 5 to buy 10 of the arbitrage strategy has ended.
To sum up, the international steel shortage of inventory, cost and demand led to the recent price increases, support the domestic steel prices. While domestic steel shipments to reduce costs and rising steel prices supported by short-term, post-Baosteel and sand steel price policy will have fueled the introduction of the role, but because of inventory turning point has been delayed, would make the latter much pressure on prices. Taobao, the carry trade activity cited intraday price ups and downs, investors need to control risk, should adopt the swing trading.
