Rebar prices remain strong

Current heating season limit production has been started, starts falling, rebar to inventory is smooth, rebar prices remain strong. Due to the peak season demand recovery expectations after the Spring Festival, superposition and production entities time lag, under the low inventory pattern, is expected to supply gap will still exist. At the end of the heating season, steel mills will also drive the raw materials and production expected the repair, thereby raising timber cost, very affect the price of bearing market stability. Futures in high premium circumstances, is expected to be put on discount repair quotation. During the heating period of heating season limit production has been started to leak in mid-november formally started, the blast furnace capacity utilization plummeted, the latest value is 72. 63%, dropped six. Supply 7%, facing a sharp contraction. At the same time, though we see in north end demand is affected by the weather and shutdown, but there are still other areas site work, needs to perform well, Shanghai line screw purchases in the near future also in counter-season rose, stock price performance is still strong. And the current main rebar contract discount rate is bigger, price 600 yuan/ton, the subsequent collapse does not occur in the spot circumstance, futures disk higher discount will offer to do more than larger margin of safety. In addition, the inventory is low price support. Maintain strong rebar prices currently rebar social inventory for 361. Internal inventory for 190, 70000 tons of steel. 250000 tons, a total of 551. 950000 tons, and in the same period of 2016 to 621. 270000 tons, in the same period of 2015 to 647. 870000 tons, the data indicate that the inventory data has hit a new low in recent years. And consider this year to limit production, capacity utilization of rebar will continue to fall, is expected to rebar inventories to accumulating sharply. If subsequent needs a strong recovery, will promote the rebar upward again. Supply gap is still difficult to fill on the one hand, the weather gradually cools, the north gradually from the construction site stagnation, steel face double shrinkage of supply and demand situation. But 1805 contract corresponding to the peak season, after the weather gets warmer next year will usher in the traditional 'yue four', the rebar end demand will usher in a strong recovery. On the other hand, although their production after the supply will recover, but a series of factors will restrict supply than expected growth. One is that the blast furnace from shutdown to achieve stable production still need some time, and time needed for different blast furnace, and production time lag; The second is to capacity will continue to push forward, recently released from hebei province to the capacity to complete the scheme, it still has 20 million tons of iron production need to exit. Production expected rise the cost of heating season because of interference to leak, the relatively strong, the raw material of iron ore and coke fell more than 30% respectively, and the cost of the collapse to steel mills profit once again return to the high above 1000 yuan/ton. Rebar prices remain strong, but after the heating season limit production, steel mills will have on the raw material to prepare in advance. Iron ore inventories are still in a relatively low position, subsequent inventory once started, will boost the raw material price. We think that the production cost of raw material to the repair will lift the steel mill, if high profits continue, will continue to push timber price, may once again driving black plate series market do more enthusiasm. Together, rebar contract corresponding to the 1805 season, the heating season will face after the plumpness of supply and demand situation, but the blast furnace production to save a certain time lag, the supply gap at the appointed time will still exist. Superposition of low inventory and blast furnace production drive repair raw materials, high profit and cost upward, which could form a positive feedback, provide positive support to do more. In addition, in the case of physical strength, main rebar contract discount rate is bigger, will do more than provide a margin of safety.