Analysis logic and forecast of recent steel price trend

- Mar 22, 2019-

In the course of the traditional high season, which has been used for most of the past, the steel market has not been able to replicate another 2016 years of madness, although there is a bull market residual temperature, but can no longer form a big rise, although March of rebar futures (1705) Prices again hit an all-time new. Over the past quarter, steel prices as a whole have maintained a strong upward posture, showing a strong desire to rise in the off-season. A big gesture to put the bull market to the end, which also led to a unanimous conclusion at an industry conference in late March. It is also a testament to the fact that the market will face a shift when the market goes into madness or is about to enter madness, and this shift is not the adjustment of last 4-June, but the true end, the end of the bull market.

Think carefully about the first quarter of steel prices rose nothing more than these three:

First, the surplus temperature of the bull market rise. After an ultra-long period of decline, it was hard to come to a bull market, "and Rise and Cherish" is the end of last year's industry mogul from the bottom of his speech.The rise in the first quarter of this year, which continued from December last year, is similar to the whole year of 16 in that it also experienced a Fed rate hike, the 16 market has just passed, Yu Wen is still in the memory, defined as the inertial thinking of the bull market or good expectations, is a price rise again and hit a new high of a very important reason.

Second, confidence in the reform of the national supply side. Since the four quarter of last year, the state has repeatedly made policies and statements to crack down on "steel" and even raised them to the level of a "political mission", requiring that the "ground steel" be cleared unconditionally before June 30, 2017. The residual temperature of supply-side reform in the 2016 is still there, and the 17 supply-side reform is really "bruising" is also widely recognized by the market. Indeed, for historical reasons, "steel" has become a force that China's steel can not be ignored. Exactly how many specific capacity there is, no one has been transferred to determine the amount of the number. But conservative estimates are also more than 100 million tons, if the "ground steel" all clean up in the market results will be "insufficient demand", price increases are reasonable. Usually for the event hype, the early stage is more likely to affect the price and really cashed before instead of the previous kinetic energy strong.

Third, the good wishes for infrastructure and the performance of real estate is not too bad. 2017 is a big year of infrastructure, in the country announced the large-scale projects are also unrelenting, giving the impression that the country has increased investment in infrastructure. Also for a variety of reasons, different industries have good expectations for infrastructure, such as excavators. From the first quarter of excavator data, the production of excavators increased significantly, the latest data of the machinery Industry Association showed that the March 2017 excavator sales of 21389 units, an increase of 56.2% yoy, 2017 1-March cumulative sales of 40467 units, an increase of 98.87%, the growth rate has hit a new high since 2002. The surge in production and sales of excavators has nothing to do with the demand for infrastructure markets, but it is not entirely due to infrastructure.