On Tuesday, iron ore led the fall of black commodities. “The bearish turn in macro sentiment is the main reason for this round of black declines.” Everbright Futures Institute black research director Qiu Yuecheng told Futures Daily reporter, one is to tighten the capital surface, many places introduced strict real estate regulation policies; Second, the central bank continued to withdraw funds from the market last week, with a total of 470.5 billion yuan in the whole week. The overall liquidity is tight. Third, Shanghai, Beijing and other cities released a large number of related real estate regulation policies and measures, covering adjustment of purchase restriction policies, tightening of mortgage loans, stabilizing the order of the real estate market, and strengthening the supply of rental housing.
Migrant workers are reported to have returned home earlier than usual this year, and demand for timber has weakened rapidly in recent weeks, with the overall pace and volume of inventory building higher than seasonally. In the last 5 weeks, the storage rate of rebar reaches 6.1%, 5.3%, 7.0%, 9.7% and 15.9%, respectively. The current total thread inventory reaches 8.917,100 tons, an increase of 2.566,800 tons year-on-year.
“The current steel mill has been at a loss, production maintenance increased, the recent departments have been deployed carbon peak policy measures, the market to crude steel production expectations are strong. In addition, the arrival of iron ore in the last two weeks and the continuous increase in inventory, the coke inventory also rose, the market is not high recognition of high raw materials, steel mill profits to repair through the suppression of raw materials to achieve, the active withdrawal of long funds accelerated the decline, reflecting the emergence of raw materials prices significantly more than the decline.” Qiu Yuecheng said.
Galaxy futures black analyst Lu Xiaojing told the futures daily reporter, the end of the lumber due to seasonal demand down, and the production of molten iron remains high, steel has been significantly tired. The market is not sure about the timing and strength of the demand return after the Spring Festival, so it is worried about the price performance under the high inventory after the Spring Festival.
“At present, steel mills have losses due to surging raw materials, if the post-holiday demand recovery is less than expected, the timber will be oversupplied, prices or further fall, which will lead to continued losses of steel mills. Steel mills are expected to cut production further in the face of continued losses. Because the cost of molten iron is now higher than that of electric furnaces, and electric furnaces still have a certain profit, it is expected that the output of molten iron may decline first. The drop in molten iron production directly affects the demand for coke and iron ore. In addition, the Ministry of Industry and Information Technology has also proposed or adopted certain policies to reduce the crude steel production in 2021, although there is no clear policy, but also on iron ore, coke demand is expected to form a negative.” Lu Xiaojing said.
It is worth noting that on Tuesday, iron ore fell sharply, the main contract of iron ore futures fell as much as 6%. The I2105 contract closed down 4.45 percent at 933.3 yuan per ton in the afternoon. Founder medium-term futures iron ore researcher Liang Haikuan believes that this week, the volume of foreign ore shipments picked up or iron ore futures prices down one of the direct reasons.
“From the shipment of 14 ports of Aoba Mine in this period, the weekly month-on-month increase was nearly 5 million tons. Among them, weekly shipments of Australian mines returned to more than 15 million tons, and weekly shipments of Brazilian mines rose to 7 million tons. The sharp recovery of short-term shipping volume and the recent increase in arrivals have shaken the market’s expectation of tight supply, breaking the original pattern of weak supply and demand, and the market has a bearish mood in the short term.” Liang Haikuan believes that the current downstream terminal steel demand has nearly stagnated, the profit margin of the steel mill has been compressed, gradually into the loss, active maintenance increased, the average daily production of molten iron gradually fell. With the steel mills before the end of the replenishment, the demand side of iron ore spot price support gradually weakened. However, in the first quarter, the uncertainty of the shipment of outer mines is still strong. Recently, there are signs of another tropical cyclone in Western Australia, and the pressure of outer mines supply end is difficult to continue to accumulate.
It is worth mentioning that on January 29, more than 41,000 tons of iron ore from Sierra Leone’s new Tangkolili iron ore project was shipped to China, the first shipment since the project was restarted. Chinese-owned Qinghua Investment controls the mining operations at the project, which previously had a peak annual output of 13m tonnes. Qinghua said it planned to mine 30 million tonnes of iron ore a year in West Africa, including the project. Zhao Yongjun, an iron ore researcher at CITIC Futures, told Futures Daily that this year, when domestic iron ore supply was at its most tight, the inventory of 45 ports fell by 19.4 million tons, and the resumption of production of the Tangkelili iron ore project will effectively ease the pressure on domestic supply.
“Western Australia’s cyclone has yet to have a significant impact on iron ore shipments, the previous bullish expectations have been disappointed. Although the current spot price is still strong, but in the expected role, the plate first fell, but still need to pay further attention to the late iron ore shipment.” Lu Xiaojing said.
Influenced by the recent macro sentiment to turn short, coke futures main contract plunged. However, the coke spot market is relatively stable, after 15 rounds of rising coke a total of about 1000 yuan/ton.
Yide futures coal coke researcher Zhang Yuan believes that from the point of view of supply and demand, coke supply has improved in the near future, on the one hand, transportation has been restored, on the other hand, steel mills have reduced production. But the steel mill inventory has not recovered, the overall is still low, this point in the northeast, the central and southern region is more obvious, steel mill procurement enthusiasm is still high.
Looking forward to the future, Zhang Yuan said that the coke spot market is expected to be tired, the spot market is expected to have 300-400 yuan/ton drop. Because the current coke overall supply and demand has not reached a loose state, so the steel mill for coke demand still maintain a certain optimistic attitude. In addition, the market said that the post-holiday control of crude steel output policy or announced, the formation of pressure on coal and other raw materials, to promote the market bearish sentiment, but the policy can not be falsefied for a short time, the market partial bearish sentiment before the holiday or continuation. It is expected that the policy will be difficult to implement within the country in a short period of time, so the price after the Spring Festival is still supported.
“The current coking plant production positive, coupled with the gradual release of new coking capacity, coke inventory sales ratio a turning point, spot end supply tight situation is gradually eased. This leads to market expectations of coke spot supply and demand contradiction gradually ease, the price of coke drop. In terms of coking coal, there is no mismatch between supply and demand of coking coal at present. The mine starts and the output is at a high level compared with the previous period. There is sufficient coking coal inventory in the coking plant steel mill. In the case of the coking plant capacity utilization ratio increase, there is still a storage phenomenon, leading to the market is expected to run weak coking coal.” Lu Xiaojing said.