Thoughts on the April market: Into the first week of April is the trend of rushing back, in the Ching Ming Festival after the return, under the stimulation of the new district of Hsiung, steel prices quickly surged, especially coking coal coke prices rose significantly. But behind the rise in prices is more due to the supply contraction expectations brought about by the Australian Hurricane destroyed railway. The impact of the hurricane on Australian coal production is forecast to reach 21 million tonnes.
The conversion to the export of metallurgical coke affected 10 million tons, of which, affecting China's imports of about 2 million tons. Coal producers such as Glencore and BHP Billiton closed some of their coal mines in Australia at the end of March, and it is expected to take 4--5 weeks to restore the situation. The overall contraction of the domestic coal coke market is expected in April.
The rise in coal coke prices has made the coal Coke Plate, which was already in a tight equilibrium state, again (unexpectedly) the focus, which will also help reduce steel mill profits. As a result, too high steel mill profits will gradually return to the vicinity of 500 yuan, the author believes that this will be the new normal under the profit level. This will likely dampen a further decline in rebar prices.
According to the current cost calculation, the current domestic billet cost in about 2800 yuan/ton, when the thread fell to less than 3000 yuan/ton, some steel mill profits have been compressed near the break-even line. So in the short term it seems that 3000 yuan/ton near has an important supporting significance, one is the cost support line, one is the Bulls conversion support line. In the case of steel price overall turn down, the upward space is also limited, the approximate rate of April will be concussion finishing market, interval 3000-3200 yuan/ton, high limit of 3500 yuan/ton.
That is, it does not rule out the possibility of rushing up again and hitting a new high (RB1710 contract).
In addition to cost factors, peak season factors and national capacity factors will still be the reason to support the April steel price surge.
For the two quarter market, the overall maintenance of the shock fall trend expected, the price drop is a large probability event. Market funding is tight after the Fed raised interest rates, and despite a cut in the Shibor after entering the April, it is only reflected in the daily and weekly release rates, which have not decreased over the longer cycle, and the southern Meiyu season has come earlier this year, with southern markets or early entry into demand in the low season, with significant resistance to the rise in steel prices The total inventory of iron ore ports finally began to decline last week, but it is still a relatively high level compared with the same period, as of April 7, the total stock of iron ore port 133.74 million tons, a decrease of 820,000 tons from last week, the overall performance of steel inventory is declining, but the stock of plates is still rising, The level of hot-rolled stocks is still 43.78% higher than last year.