Since 2017, the hot contract and thread futures main contract price spread has been continuously falling from the high level. At the beginning of March 1705, the contraction of the low spiral height began to appear, completely ignoring the fact that the hot coil cost is higher than the thread, especially After entering the month of May, the main contract of the 1710 contract of the Rolling Snail Futures accelerated down. It once fell to -164 yuan/ton, and then rebounded. It is currently maintained at around -80 yuan/ton. At the same time, the spot market hot-roll and thread price spreads are more significant, and the price difference between the rolls and the screw reaches -400 yuan / ton. From the cost point of view, because the hot coil production line is more expensive than rebar, high rolling cost and high equipment maintenance, it is generally believed that the price of hot coil should be higher than the thread of 200-250 yuan / ton, or even higher. The reason for this is that many of the policy-oriented guidance for this year's multi-threads and the demand for hot coils are less than expected, which is the core problem that causes the price difference of the snails to hang up.
First, the situation that causes the snails to weaken will remain for a long period of time.
(1) Supply: the thread is tight and the heat coil is relatively loose. Chaoyang Hongda Machinery Co., Ltd.
1. Rebar production has been significantly reduced due to continued losses in the fourth quarter of last year.
Rebar last year due to the poor competition of the strip steel, the regular rebar continued to lose money in the fourth quarter of 2016, the loss was up to 200 yuan / ton, long-term loss operation prompted some steel companies difficult to support, the flow of funds broke According to estimates, the supply of rebar in the fourth quarter of last year fell by 4.1% year-on-year, and the annual output was reduced by about 10 million tons.
2. The rectification of medium-frequency furnace floor steel has caused a significant drop in the actual supply of construction steel.
Under the strong impact of the strip steel, in order to maintain the healthy and stable operation of the market, the Ministry of Industry and Information Technology mandated that the strip steel should be completely removed at the end of June this year, and the bad currency should be expelled with good money, and the red line of the bottom line and the three lines of the line should be resolutely done. The medium-frequency furnace floor steel is expected to have a production capacity of about 100 million tons, affecting the output of about 50 million tons, while 90% of the strip steel is the application of replacing the building materials in real estate. The cleaning of the strip steel will make the actual supply of construction steel obvious. tension.
3. The production of hot coils has been at a historical high level due to the long-term maintenance of high profits since last year.
The hot coil has maintained a high profit status of 200-800 yuan/ton from the third quarter of last year to the first quarter of this year. The profit-driven role has promoted the expansion of production by steel enterprises. The utilization rate of heat coil capacity has stabilized at over 80%, and the peak value has reached 86.5%. Stay high. According to statistics, the output of hot coils in January-May 2017 increased by 4.1% year-on-year, and the output was still at a high level.
(2) Demand: strong thread hot roll is weak
1. The PPP project promotes the gradual acceleration of infrastructure investment, and strongly enhances the demand for construction steel such as thread.
The expansion of infrastructure construction is relatively strong. From the excavator data, the sales volume of the excavator industry increased by 101.1% in April, and the cumulative growth in January-April was 99.5%, which was better than expected, indicating that large-scale infrastructure projects are progressing in an orderly manner. The PPP project's landing rate has further increased, reaching 34.5% at the end of March. The amount of PPP projects completed in the first quarter reached 640 billion yuan, more than 25% over the same period of last year, and the follow-up project amount is nearly 10 trillion yuan. The national one-on-one policy will promote Batch projects are accelerating. Driven by the PPP project, China's infrastructure construction in January-April totaled 3.762 trillion yuan, a year-on-year increase of 18%. The demand for construction steel products such as threaded wire rods is particularly evident.
2. The decline in automobile production and sales has led to weak demand for hot coil cold rolling.
The downstream demand for hot coils is less than expected, the consumption power is insufficient, and the peak season is not prosperous. In terms of automobile production and sales, automobile sales in April decreased by 2.2% year-on-year, production decreased by 1.9%, and small-displacement vehicle purchase tax increased from 5% to 7.5% to reduce purchase enthusiasm. The demand for hot coils increased and the supply increased to a sharp drop in prices. .
3. Poor export has a greater impact on the demand for hot coils.
From January to April, China's steel exports totaled 27.21 million tons, down 25.8% year-on-year. The main reason for the sharp decline in exports is twofold: First, the export price is higher than the market price of the independent body and the EU, which leads to the obstruction of exports; second, the US Department of Commerce’s double-reverse investigation of imported steel and the South African plan for the three-year safeguard measures for the hot volume. Unfavorable policy factors such as taxes curb steel exports. Threads are relatively strong this year, and exports can be transferred to domestic demand, while the poor export of hot coils has a greater impact on demand. Machine made
(3) Inventory: the thread drop far exceeds the hot roll
According to statistics, the social inventory of rebar has dropped from this year's high point to the current inventory, with a drop of 46%, a year-on-year increase of 14%, the largest decrease in recent years, indicating the comparison of threaded terminal demand. Strong. The decline in social inventory of hot coils is not very obvious. From stock highs to current stocks, the decline is only 6.9%, down 15% from last year, indicating that the willingness to replenish the stocks downstream is not strong.
Second, there has been a slight change in the contradiction between the supply and demand of hot coil and rebar in the near future.
(1) The production of hot coil has declined for several consecutive weeks, and the thread is still at a high level.
Due to the fact that the profit of the hot coil is much smaller than the thread, the inspection of the hot rolling line in the second quarter increased significantly. Mysteel data monitoring, the production volume of the hot coil decreased for three consecutive weeks, and continued to decline from the capacity utilization rate of 84.9% on April 21 to 81.2 on May 12. %, while thread production has remained at a high level. In the past three weeks, the output has remained at 312-3.2 million tons/week. On May 12, due to the one-to-one meeting in North China, the output per week was slightly reduced by 40,000 tons. We believe that after a long period of threading and heat reduction, the tight supply of thread will be alleviated and the supply of hot coil will be narrowed slightly.
(2) Hot roll demand is beginning to show signs
1. Due to the fall in prices, the sales of private coil production enterprises are in good condition.
The private coiling enterprises mainly use the slab rolling coils, and the price of the coils is reduced to promote the sales, and the lower enterprises have begun to replenish the warehouses. Due to the low production cost, private coil companies still have a certain profit margin in the process of falling hot coil prices. According to market research, the recent sales of private coil companies are better, and downstream demand is showing signs of start-up.
However, the sales volume of state-owned steel enterprises has not seen any significant changes.
2. The demand for hot coils is gradually approaching, and demand is expected to gradually strengthen.
Conventionally, the consumption season of hot rolls is after June of each year. With the gradual completion of real estate and hot weather, home appliances and automobiles enter the stage of strong replenishment, and the demand for hot rolls is expected to gradually increase.
3, the price back after the hot roll export has improved
The price of hot coils fell back favoring exports. At the end of March, the volume of hot coils fell almost close to the price of independent exports. As of May 12, the export price of China Volkswagen has been lower than the export price of CIS by US$4/ton. It is understood that the export of coiled plates of some enterprises has increased, and the improvement of exports will further stimulate the demand for hot coils.
4. PPP projects may be limited due to the rectification of illegal financing guarantees by local governments, resulting in a temporary reduction in thread demand.
On May 3, the Ministry of Finance issued the "Notice on Further Regulating the Local Government's Debt Financing Behavior", stating that local governments are strictly forbidden to use the PPP and various types of investment funds funded by the government to violate the law and disguise their debts. The news is that the progress of the PPP project may slow down and the demand for thread is expected to decrease temporarily. However, we believe that the scale of the PPP project has been formed, and the country is also more supportive of this piece. In the long run, the demand for thread in the PPP project remains strong.
Third, the conclusion
1. Recent:
In the recent past, there has been no substantial change in the fundamentals of the snails. The price difference between the snails and the snails has been gradually restored. However, there has been no fundamental reversal. The situation of the snails will remain for a while. The current price difference is only for the past. Partial repairs that fell sharply.
2. Medium and long term:
In the medium and long term, we believe that the return of the roll snail spread needs to meet two conditions: one is the large-scale start of the downstream demand of the hot coil; the other is the conversion of the hot coil to the thread line by some double-material steel mills. If the monitoring data shows that the hot coil inventory has dropped sharply, the heat coil capacity utilization rate has continued to decrease and the thread capacity utilization rate has remained high, and the roll screw price spread is expected to rebound in a practical sense.
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