Reversal of supply and demand of rebar output further aggravated

According to the statistics of the China Iron and Steel Association, the average daily output of crude steel in key steel enterprises in early June was 1,884,700 tons, which was a 4.5% increase over the previous period. The national average daily output of crude steel is estimated to be 1,999,400 tons, which is an increase of 2.03% over the previous period. With the pre-inventory of high-priced raw materials digested, some small and medium-sized steel companies already have a certain margin of profit. At present, there are few occurrences of production reduction and production restriction by steel mills. It is expected that the average daily output of crude steel in June will remain at a high level of about 2 million tons. China has entered the traditional off-season with high temperature and rainy conditions. The high crude steel production will further aggravate the contradiction between supply and demand in the market.

In terms of inventory, as of June 25, domestic steel stocks in major cities (4076, -31.00, -0.75%) were 15.42 million tons, a decrease of 10,000 tons from June 18, which was basically the same as last week. This week's steel society It is more probable that stocks will increase by reduction. Domestic rebar stocks stood at 6.66 million tons, a decrease of 37,000 tons from June 18, a decrease of 0.5% from the previous quarter. From a regional point of view, the northeastern rebar social inventories fell by 40,000 tons, the fastest decline in the area, while the social inventories in the southwest and east China began to rise. Judging from the inventory situation, last week's inventory showed a state of sideways consolidation, and the increase and decrease of each variety is limited.

In terms of demand, terminal purchase volume began to fall. As of June 25, the terminal purchase volume was 14,000 tons, down 45.6% from the previous quarter. After a slight rebound in terminal purchases, it continued to decline, and no continuous volume was formed. With the arrival of the rainy season and the intense heat, steel market demand will enter a relatively low season, and the demand of the steel market in the later period will have a seasonal fall. With the seasonal demand drop and the market not agreeing on the bottom of the price, this week's demand will still be mainly based on tentative release. In the short term, weak demand is difficult to sustain sustained price support.

In terms of spot, the average spot price of rebar in the country has not changed much during the week, but domestic iron ore prices have risen sharply. On June 26, the average price of rebar nationwide was 4,072 yuan/ton, down 2 yuan/ton from June 18. According to the spot iron ore price of Qingdao Port, according to the Jinxin cost-profit model, after deducting the national average price, the gross profit of rebar is RMB 39/t on June 26. The sharp increase in domestic steel production has kept the price of iron ore high. The Platts index soared from the previous period of US$132.5/tonne to US$139/tonne on June 25, resulting in a sharp drop in the estimated gross profit.

From the domestic data point of view, after the central bank cut interest rates, the recent real estate market has shown signs of recovery. However, the central government's attitude towards real estate regulation and control is still rigorous and there is no obvious sign of relaxation. Real estate warming still requires substantive policies. HSBC China's preliminary June manufacturing managers' index was 48.1, which was lower than the final value of 48.4 in May. It was again refreshed for seven months to a new low, with new export orders setting the largest decline in more than three years, indicating that export contraction accelerated. Under the circumstances of weak external demand and domestic demand, the domestic macro economy has not seen a bottoming up. From a fundamental point of view, although the current cost of rebar and low inventory levels have certain support for prices, the downstream demand does not support the sharp rise in prices, and the gradually weakening steel prices are still difficult to be supported by real demand. ** Prices will continue to oscillate downwards, continuing the time-for-space operational pattern.