PPGI metal sheet in coils market is expected to rebound in April!

After the Spring Festival, the PPGI metal sheet in coils market first went up slightly, then fell sharply under the influence of various "accidents." At the end of March, under the influence of "unbalanced supply and demand, with the gradual increase in demand," it was extremely pessimistic. The trend of a strong rebound, although during the period of more than expected decline, but the trend is basically in line with the "rebound is still unstoppable" expectations. Looking ahead to the April steel market, it is expected to maintain a turbulent upward trend.

The main factor that continues to rebound in April is that demand is expected to exceed its conventional strength, and the intensity of demand will determine the rebound rate.

First of all, the demand before and after the Spring Festival was generally underestimated and suppressed prices. According to the statistics of the National Bureau of Statistics and Customs, the apparent domestic consumption of crude steel during the January-February period increased by 10.1% year-on-year, which is reflected in the background of restrictions on construction in some regions during the cold winter and heating seasons. Even in the March and August of this year, the daily average transaction volume of the 237 companies surveyed by the Steel Daily reached 160,330 tons, which was a 3.8% year-on-year drop regardless of the transaction reason.

Second, demand will start with unprecedented intensity and trigger a rebound. In the last week of March, the average daily turnover of 237 companies reached the historical highest level of 221,539 tons, which was at least 10% higher than the performance of the best transactions in late April and November of last year, and exceeded 270,000 for two consecutive days during the week. Tons of the highest level of history. The turnover of the steel and silver platform reached a new high in the final week of March, with average daily turnover reaching the highest level of 140,110 tons. After the holiday, the average transaction volume of the Lunar New Year steel platform and 237 Chinese Lunar New Year transactions increased by 12% and 26% respectively year-on-year.

Again, higher levels of demand are expected to continue for some time. From the PMI new orders and new export orders index in March, they rebounded from 52.3 and 50.6 to 53.3 and 51.0 respectively, indicating that demand is improving. In April, the northeast and northwest have new construction one after another. In particular, we need to superimpose the heating season, the cold winter, and the release of demand from the two sessions. In the future, the elasticity of demand will be relatively large, and there will be some resilience.

Everyone may still vaguely remember that the average daily turnover of 237 companies rose to 200,000 tons or more in late April last year, triggering a rebound in prices. The average daily turnover in November last year reached 200,000 tons, causing a rise in construction steel prices of 1,000 yuan.

The secondary factor that continues to rebound in April is that supply elasticity is lower than expected

First of all, according to Mysteel's survey as of March 30, 166 steel production enterprises (a total of 627 blast furnaces), a total of 94 blast furnaces were in overhaul status. Only 18 blast furnaces were resumed at the beginning of April, and the daily average increase in molten iron production was only 40,100 tons. . It can be seen that the supply release is limited. In the future, due to the continued implementation of peak-shift production by Sui and Tangshan, even partial regions other than 2+26, such as Maanshan Iron and Steel Co. The situation of environmental protection and high pressure is hard to change, and supply release is limited.

Secondly, some companies have long-term full-load production, originally planned to have partial inspections in April, and the continued sharp decline in steel prices in mid-March, which will increase the number of maintenance companies in April. In this way, there will be rare peak maintenance in history. Case.

Furthermore, the loss of some electric furnace companies has also forced the production enthusiasm of EAF to decrease. If prices do not rebound to or near the cost, the supply of a few enterprises will be affected. Even for blast furnace enterprises, due to the decline in profitability, some inland enterprises have also fallen into losses, which has reduced the output rate. From the improvement in the sales of some Chinese ore or even low-grade ore, it can be seen that some enterprises also add wastes The decline. Out-of-balance-sheet supply also decreased significantly year-on-year.

In the future, with asymmetric supply and demand, inventory will rapidly and significantly decline. In the last week of the last week of March, 132 city snails and wire stocks fell by 1,225,700 tons. It is estimated that the single-week inventories of 35 cities in mid-to-late April will decline to one million tons.

The steel futures and raw fuel prices have been fully adjusted. Once rebounded, it is expected to form a resonance. Thread futures fell by 729 yuan, iron ore (down 138 yuan) and coke (down 557 yuan) by the original fuel prices also appeared significant (close to or more than 20%, less than 30%) fell. With the rebound of production, it is expected that there will be full follow-up and resonance will be formed.

Although the main negative factors are basically completed, there are still some points worth paying attention to: Since this year is the most dynamic year in the form of off-balance sheets, high output and high inventory may be the norm. Short-selling power cannot be ignored. In addition, one of the three central tasks this year is de-leveraging, and we must pay close attention to the pressure of liquidity on infrastructure. There is also the supply of "ground bar steel" brought by the prevailing crimes, which cannot be ignored. These factors may put pressure on steel prices.

In short, in the steel market in April, steel prices are expected to rise above the upward trend as volatility is exhausted and supply and demand are not equal.