Reprinted: China steel net

Premium patterns in thread nearly far month contracts again, periodic limit production is the main reason most of the recent steel price increases.Limit production strictly degree exceed market expectations, thread before the spot price has risen in Shanghai, near the high inventory speed decreases, consolidate the tight balance between supply and demand situation.

Demand basically see infrastructure and real estate investment data, which shows a strong toughness.Especially in October with drop in real estate investment growth steady, at 7.8%, down 0.3% compared with last month, sharply lower than real estate sales year-on-year growth fell to 8.2% in October from 10.3% in September.Land area purchase monthly year-on-year growth has fallen from 6.2% at the beginning of the year rose to 12.9% this month, land area to be developed in September for the first time positive was 0.7%, showing land development of real estate investment growth is less affected by falling sales.A slight drop in infrastructure investment also, for the two requirements of rebar downstream areas, real estate investment growth in short term is difficult to rebound sharply, infrastructure investment steady growth in the fall, demand growth remained stable.Changes in demand than supply, predictable and amplitude is limited.

This round of "2 + 26" restricting output strength over a period of long, yan city heating season, USES "1 + 16" combination, enforcement than expected.If their production 50% covering all cities "2 + 26" and strictly implemented, is expected to affect the national average daily steel output by more than 12%.Survey of 163 steel blast furnace capacity utilization has fallen to a record low of 63.12%.Sharply reduced 7.05% a week earlier, at the lowest level since there are statistics.One of the biggest limit production strength hebei region, statistics of seven samples of steel blast furnace capacity but also fell by nearly 14% a week earlier.Also with blast furnace capacity utilization in recent years, low inventory and statistics of the national 26 cities long products and sheet 23 cities inventory overall decline, the wire stocks the largest decline, thread.As of November 20, rebar social stocks fell to 3.62 million tons, fell by 9.5%, "steel mills and steel trade," the national total inventory of 8.86 million tons, fell 5.9%, weekly to amplitude to the highest since late may.Anti seasonal sharply to drive spot inventory clinch a deal the better, the main contract than the spot price discount of 520 yuan/ton.Under the administrative limit production measures, steel mills gross margin increased to one thousand yuan per ton, again but unsustainable because their production scale, the current profitability can't reaction under the normal state of industry, volatile capacity for short periods of time, RB1805 discount contract with repair market fundamentals are hard to come by.

Coking enterprises also affected by environmental limit production, coupled with poor profitability, operating rate fell to its lowest level in two years, as of November 20, coking enterprise scale of production capacity is more than 2 million tons of capacity utilization to an average of 70.9%, 100-2 million tons of capacity utilization rate of 62.2% on average, less than 1 million tons of capacity utilization to an average of 66.03%, with capacity of 2 million tons of coking plant utilization rate of weeks fell as much as 4.9%.Coking enterprises do not have a high level of clearing capacity and capacity utilization is bigger to the sensitivity of the profit, short cycle in production capacity volatility is very large.Most of today's steel mills coke inventory is still in the normal level, the upstream stocks higher prices, steel mills are still on coke procurement enthusiasm is low, coking enterprises did not significantly improve delivery, inventory not as start reduce synchronization with greatly reduced.The level of 138 million tons of iron ore port stocks in sequential change is not big, mainly ore shipments increase outside the home.From the perspective of the production plan of next year a few big mines, easing supply situation continues.

In the short term, due to the recent impact of seasonal environmental control factors, the steel price, inventory, production capacity of a sharp fluctuations, period is now spread due to reflect the fundamentals of different, difficult to return to normal levels.Steel price does not represent a wide range of the interval in the near future the balance between supply and demand, wide range will continue.