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"Black series" futures prices soared how to interpret the market in the second half of the year?

Time : 2021-06-23 Hits : 56

Recently, the prices of "black" futures represented by rebar, hot coil, coke and iron ore have continued to rise to new highs. According to statistics, since the beginning of the year, the main contract price of rebar has risen by about 28%, and the main contract price of hot coil has risen by about 31%.

 The mismatch between supply and demand between limited production and peak season is the short-term factor for the price increase of the black series this round. On the one hand, the steel industry is the industry with the largest carbon emissions from the manufacturing industry. The steel industry will play a pivotal role in the implementation of carbon neutral policies. On the other hand, steel consumption has obvious characteristics of the off-peak season. March to April is the peak season for downstream demand. From the apparent data, the trend of rebound and year-on-year increase is more obvious. Therefore, the implementation of more intensive production restrictions during the peak season is an important reason for the rapid rise in steel prices. 

   The hot steel futures market is closely related to the fluctuations in the prices of upstream raw materials. In the past month, the main coke contract 2109 has risen by 17%, and the price is gradually approaching the record high set on January 8, 2021. In this regard, from the perspective of the supply and demand of coke itself, the state continues to strengthen environmental protection supervision, which will inevitably affect the production of coke enterprises in the short term, resulting in a decline in supply. However, molten iron has rebounded due to the relaxation of steel mills' production restrictions, and coke supply and demand have continued to improve and are currently slightly tight. The trend is stronger under the logic of superimposed traders buying bottoms and stockpiling, as well as the high profit distribution logic of steel mills. 

   In addition, the price of iron ore is also rising. On April 26, the main iron ore contract 2109 of DCE rose to 1,166 yuan/ton, a record high, which was 21.98% higher than the 922 yuan/ton at the beginning of the year. The rise in iron ore prices is closely related to the high steel prices caused by domestic production restrictions. The main reason is that the supply of iron ore is highly concentrated. Once the profit of steel mills rises, iron ore suppliers will control shipments and raise prices and demand profits from steel mills. Of course, the repeated epidemics abroad have also had a certain impact on the supply of iron ore, and various factors have jointly raised the price of iron ore. 

   The continuous increase in the price of the "black series" has attracted the attention of relevant departments. From May 1, 2021, tariffs on certain steel products will be adjusted. Among them, the zero import tariff rate for pig iron, crude steel, recycled steel raw materials, ferrochrome and other products is implemented; the export tariffs for ferrosilicon, ferrochrome, high-purity pig iron and other products are appropriately increased, and the export tax rate of 25% and 20% are respectively implemented after adjustment. % Temporary export tax rate, 15% temporary export tax rate. The above adjustment measures are conducive to reducing import costs, expanding imports of steel resources, supporting domestic reduction in crude steel production, guiding the steel industry to reduce total energy consumption, and promoting the transformation and upgrading of the steel industry and high-quality development.

 The excessively rapid price increase of related futures products will naturally be suppressed with the introduction of policies, but for the outlook of the "black" futures prices, if you are from a mid-to-long-term perspective, under the background of carbon neutrality, the steel industry has normalized production restrictions. And the trend of expanding the scope of production restriction. However, the domestic economy has strong endogenous momentum, a good recovery trend, and strong demand-side resilience. Under this circumstance, steel prices will continue to rise easily but never fall in the medium and long term. 

In the short-term, under the background of limited supply release during the peak demand season, steel prices still have the momentum to continue to rise. However, as demand gradually returns to normal after May 1st and the off-season factors approach, the price upward momentum will also change. weak. In the medium and long term, controlling production capacity and suppressing production is a long-term trend, and demand toughness is still strong, and the probability of steel prices rising is greater than the probability of falling.

     Steel futures prices are still strong in the short and medium term, but the room for price increases is also limited, and the demand may be adjusted in the off-season in July and August. Coupled with the gradual increase in foreign iron ore production capacity to suppress iron ore prices, the superposition of various factors will inevitably lead to pressure on the price of black products in the second half of the year.

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