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First talk about why the futures price of rebar is higher than that of hot coils. Since November last year, the domestic real estate market has continued to be sluggish, and the demand for construction steel such as rebar, high-line, etc. has been shrinking. The demand for hot coils as steel for manufacturing is still stable. According to common sense, the production cost of hot coils is between 150 yuan and 180 yuan/ton higher than rebar, and the price of hot coils is definitely more expensive than rebar.
However, this year's steel market did not play according to common sense, and the deep reasons behind it are worth our attention: 1. As of last weekend, domestic electric furnace steel mills mainly produce construction steels such as rebar, which have lost operating rates of less than 25%, resulting in a relatively reduced supply of rebar; 2. In the first half of the year, domestic blast furnace steel mills also tilted their production capacity towards industrial steel such as hot coils, resulting in a serious backlog of hot coils; 3. The international market's hot coil prices fell sharply, and domestic hot coils lost their competitive advantages, resulting in a significant reduction in exports.
This week, some rebar varieties in the steel market in some cities were out of stock or short of stock, so it is not surprising that rebar futures and spot prices are strong. Although steel prices have fallen sharply, the rules of supply and demand in the market economy have been working.
Let’s talk about what information is hidden behind the rare out-of-synchronization of black commodity futures trends? Why did coking coal and coke prices fall sharply against the trend? In the afternoon, a friend of the steel trader told me, "Although the price of coking coal has fallen below the 2,000 yuan mark, the profit is still 900 yuan."
, indeed, this is true. By analyzing the financial statements of listed companies in the coal industry, you can get an "amazing" conclusion. In the past two years, the production profit margin of coal, especially coking coal, has ranked among the top three commodities, even surpassing the non-ferrous metals, such as copper and aluminum.
In the first half of this year, the average price of coking coal market was 2,750 yuan/ton, an increase of more than 67% from the average price of 1,640 yuan/ton in the first half of 2021. The consequence is a sharp rise in coke prices and a significant increase in steel production costs. It is estimated that before 2021, iron ore and coke account for 55% and 35% of the cost per ton of crude steel, respectively, while this year, this proportion has become 45% and 45%. The cost of coke in steel production is already on par with iron ore.
At present, most domestic steel mills will lose about 320 yuan for every ton of steel billet production, about 160 yuan for every ton of rebar produced, and about 510 yuan for every ton of hot-rolled coil production, and about 230 yuan for every ton of coke produced (excluding additional chemical products). , the only upstream coking coal industry, "eat alone", has monopolizing the profits of the entire steel industry chain. It can be said that this phenomenon is gradually changing.
Domestic steel industry chain "fighting local tyrants" is in action! Yesterday, the Coke Association held a meeting and stated that it would reduce coking coal purchases. This is just a gesture. In fact, there are many factors that face downward adjustments in coking coal prices:
First, Steel mill production reduction actions have begun to be gradually implemented. On Wednesday evening, the market was hit by big news, and senior executives had already stated that they would not introduce super-large stimulus measures for excessive growth targets in the second half of the year. We must adhere to the principle of seeking truth from facts and doing our best to strive for a better level of economic development throughout the year. From this, it is judged that in order to achieve economic goals, local governments require steel mills to produce fully, and the downward trend of steel raw materials prices will also be established.
Second, Recently, there has been market news that my country may resume importing coking coal from Australia in the second half of the year. What impact does this have on the supply of coking coal market? In 2020, my country's total coking coal imports will be 75 million tons, of which 36 million tons will be imported from Australia. Will the supply of coking coal still be tight at that time?
Third, If steel mills suspend production and maintenance from early June to mid-July is only at the level of small steel companies or private steel companies, this week, large central enterprises such as Angang , Baosteel , Bengang and other large central enterprises have also begun to join the ranks of production cuts. This time it seems to be serious.
We believe that with the decline in iron ore and coking coal prices in the second half of the year, the profits of steel mills will also gradually recover.The only thing that affects the price of steel is probably demand. In the environment where the demand side is gradually stable and downward, it is difficult to rise in steel prices and easy to fall.
