company news about Costs have fallen, support for steel prices weakened

Factors affecting steel prices

The blast furnace shutdown and resumption of production in December and the plan for resumption of production in January

In early December, Tangshan City launched a Class II emergency response to severely polluted weather. In order to do a good job in preventing and controlling air pollution in December, the December production limit in Hebei became stricter and output declined. As of December 24, a total of 247 steel mills across the country had resumed production in 25 and stopped maintenance of 41 steel plants, of which 35 blast furnaces had not resumed production. From December 24 to the end of January next year, 49 blast furnaces are scheduled to resume production, with a production capacity of about 170,000 tons/day, and 10 blast furnaces are scheduled to be shut down for maintenance, with a production capacity of about 60,000 tons/day. After the daily average conversion, if the production is suspended as scheduled , It is expected that the average daily molten iron production in January next year will return to 2.07 million tons/day.

Analyst's point of view: From a regional perspective, production recovery is mainly concentrated in East China, Central China and Northwest China, mainly due to the release of part of the production that has been restricted due to production pressure. The increase in raw materials of steel, the decrease of pressure on the supply side, and the weakening of price support, are negative for steel prices in the short and medium term.

Steel inventory statistics released

National building materials: social warehouses were 4.975 million tons, a decrease of 151,900 tons compared with last week, a decrease of 2.96%; factory warehouses were 2.4545 million tons, an increase of 44,800 tons compared with last week, an increase of 1.86%; output was 3,847,700 tons, a decrease of 35,000 compared with last week Ton.

Building materials in the central and western regions: community warehouses were 1,908,400 tons, a decrease of 85,600 tons compared with last week, a decrease of 4.29%; factory warehouses were 1,150,700 tons, a decrease of 28,100 tons compared with last week, a decrease of 2.38%; output was 1,319,300 tons, a decrease of 8.75 compared with last week 10,000 tons, down 6.22%.

Analyst's point of view: Nationally, the decline in the social inventory and the increase in the factory inventory indicate that the enthusiasm of intermediate steel traders in stocking has weakened. Near the end of the new year, the downstream market's willingness to store winter storage is generally low, and more purchases are made on demand. As for steel mills, due to the limited profit margins, the reduction in steel prices has narrowed. Due to concerns about inventory backlogs, intermediaries are more cautious in taking goods, and poor demand is negative for short- and medium-term steel prices.

Heavy again! The central bank conducts 200 billion reverse repurchase operations

On December 29, in order to maintain stable liquidity at the end of the year, on December 29, 2021, the central bank launched a 200 billion yuan reverse repurchase operation by way of interest rate bidding. According to statistics, there are 10 billion yuan of reverse repurchase due today, so a net investment of 190 billion yuan that day.

Analyst's point of view: In order to improve the market liquidity of bank perpetual bonds and support banks to issue perpetual bonds to supplement capital, inter-bank liquidity has been significantly loosened, and the 7-day weighted interest rate covering the new year has also fallen significantly. The large amount of funds at the end of the year hedged against the lack of cross-cycle cash flow, thereby stabilizing the momentum of the economic upward movement, promoting steady growth in demand, and indirectly benefiting steel prices.

Market Price

Steel prices fell today

15 of the 24 markets for rebar fell by 10-50, and the average price of 20mmHRB400E was 4739 yuan/ton, down 22 yuan/ton from the previous trading day;

One of the 24 hot coil markets fell by 10, and 5 rose by 10-20. The average price of 4.75 hot-rolled coils was 4780 yuan/ton, an increase of 3 yuan/ton from the previous trading day;

Eight of the 23 markets for plate fell by 10-50, and one rose by 10. The average price of 14-20mm common plate was 5082 yuan/ton, down 7 yuan/ton from the previous trading day.

Today, a total of 23 steel mills adjusted their prices without any increase; 13 companies have adjusted their prices down with a price adjustment range of 20-50, with Maanshan Iron and Steel Building Materials with the largest decline; 10 companies have stabilized.

Steel futures were mixed today

Today's main threaded futures fell 12 to close at 4315, or 0.28%; hot coil main rose 15, to close at 4456, an increase of 0.34%; coking coal main rose 29, to close at 2186, an increase of 1.34%; coke main rose 19.5 to close at 2934, an increase of 0.67%; iron The main ore fell 13 to close at 663, a decrease of 1.92%.

Short-term steel price forecast:

In January 2022, the output of molten iron will increase, the supply of steel materials will increase, and the cost will fall. The support for steel prices has weakened, and steel prices have been weak. In addition, judging from the changes in social warehouses, factories and warehouses, steel trading companies' efforts to purchase steel have declined. On the one hand, as the year is approaching, market demand has gradually narrowed. On the other hand, many companies said they would not do winter reserves, and the wait-and-see and bearish sentiment was high, which would further lead the price downward. Therefore, the short-term steel prices are weak.