From a historical perspective, with the return of spring downstream demand, the May contract is boosted by bullish factors. Traders at this time choose Winter Reserve, not only hedging spot risk, but also to obtain additional basis for gains.
In 2017, the national economy maintained a steady growth with full-year GDP growth in line with expectation. Although the real estate and infrastructure investment growth slowed down, the total scale of the economy continued to expand. It is expected that the demand in the downstream of the thread will remain optimistic by 2018. With the arrival of the off-season in the consumer market, spot prices have been revised back to a large base. The enthusiasm of traders and end-users in the winter stockpile rose again. The overcapacity was hit again and the operation rate of blast furnace rebounded, which hindered the supply side to shrink significantly. As a result, there is still room for upward rebar rebound under the multi-factorial resonance, with the core area remaining at around RMB3950-4050 / tonne.
Macro data to good
In 2017, China's GDP grew by 6.9%, up 0.2 percentage points from the same period of previous year. This is the first increase in speed for seven consecutive years. From the perspective of investment, the growth rate of national real estate investment in 2017 continued its downward trend. According to the data of National Bureau of Statistics of China, the total investment in real estate development in 2017 amounted to 10.9799 trillion yuan, up 7% year-on-year, representing a growth rate from January to November Down 0.5 percentage points. Housing starts newly built area of 1786540000 square meters, grow 7% compared to the same period, growth rate than in January-November fell 0.1 percentage point. Commercial housing sales area of 1694080000 square meters, an increase of 7.7% over the previous year, growth rate than in January-November fell 0.2 percentage points.
Overall, real estate sales were in a downward cycle, but the growth rate of investment remained basically stable with no significant drop in the newly started area. In terms of infrastructure construction, due to the large initial investment base and the limited financing of local governments in recent years, the burden on infrastructure investment has declined slightly. It is also reasonable. The regulation of PPP projects has been tightened steadily and the growth rate of total investment has slowed down. However, the overall scale of the PPP projects is still not expanding and the floor space rate is accelerating and will become the main driving force for infrastructure growth in the future. Coupled with the progress of projects such as shed reform, leasehold housing and new rural construction in 2018, the overall demand for downstream rebar is expected to be more optimistic, and the price will continue to have limited downside.
Winter stock market start
Under the theme of supply-side reform "going to capacity" in 2017, the most stringent environmental protection in production will come on schedule. This undoubtedly will make the supply side "worse." In the market generally out of stock, in short supply state, the steel prices remain high, once the steel price of steel exploration to about 2,000 yuan. With the advent of the off-season consumption, the risk of steel mills increasing by passive accumulation gradually increases. It is imperative to reduce the shipping prices. The spot price drop in most parts of the country is generally above 1,000 yuan / ton, returning to the level before the sharp rise in November last year Level, the relatively low price, boosting the demand side Dong Chu storage confidence.
Into 2018, the rebar spot has experienced rapid decline, the basis for a significant repair, is now in a state of flat water, and even appeared in the past two weeks or more premium situation. From a historical perspective, with the return of spring downstream demand, the May contract was boosted by bullish factors and the basis of weakness continued to strengthen. Therefore, traders choose Dongchu at this opportunity not only to hedge their spot risks, but also possible Get extra base returns.
Blast furnace capacity utilization rebounded blocked
In mid-November 2017, when the "2 + 26" urban heating season officially landed, the operating rate of the blast furnace fell precipitously and the steel output showed a drastic downward trend. Until mid-December, some large-scale mills in the limited-production area of North China gradually Resumption of production, steel production stabilized with the rebound in blast furnace operating rate stabilized.
Mysteel statistics show that from late December 2017 to mid-January 2018, rebar weekly output rose slightly from 299.93 tons to 3.0815 million tons, but with the blast furnace operating rate rebounded, some areas of environmental pollution The problem highlighted that environmental restrictions have been exerted again, upward trend of rebar production eventually failed to continue.
The latest data show that in late January 2018, rebar weekly output fell to 298.23 million tons. In addition, compared with the sharp drop in December 2017 and sharp drop in profits, the current price of steel products is expected to increase over the previous period due to high profit-driven overhaul of steel plant equipment over the long term. Northwest China Large-scale steel mills have emerged over a month overhaul arrangements, which will undoubtedly cause a significant contraction of the supply side of the building materials.
