A new round of production restrictions, can help steel prices rebound?

Enter qiu Dong season, air quality appears rebound, environmental protection pressure is bigger.Affected by this, the steel factory production restrictions, a new round of production restrictions issued, how much enforcement can?Steel prices can change the recent decline, a rebound, many people have become a big question mark?

The autumn and winter seasons of 2020-2021 are the fourth crucial season for building a moderately prosperous society in all respects. The 13th Five-Year Plan and the battle to win the battle for blue skies have come to a successful conclusion.However, in recent days, Beijing as the representative of the northern region began to appear haze weather, and gradually get worse.According to Beijing's environmental monitoring, the city's air quality index (AQI) stood at 206 on October 10, reaching the standard for severe pollution, with PM2.5 being the primary pollutant in the air.

A few days ago, the Ministry of Ecology and Environment released the Action Plan for Tackling Air pollution in autumn and winter of 2020-2021 in The Beijing-Tianjin-Hebei Region and Surrounding Areas as well as the Fenwei Plain (Draft for Comments), which aims to carry out continuous efforts to tackle air pollution in autumn and winter to ensure the timely completion of the targets and tasks set for winning the battle for blue skies.

The key areas involved have introduced specific measures to ensure the success of the fight against atmospheric pollution in autumn and winter.Among them, Tangshan issued a notice on further tightening air pollution prevention and Control measures on October 5, and steel enterprises began to implement new production and reduction measures at 8 o 'clock on October 6.Handan city also released a notice on the Recent Strengthening Air Quality Control Measures issued by Handan City on October 8, which mainly stopped and restricted the production of iron and steel enterprises in sintering and coking processes.These measures have played a positive role in boosting market confidence, and in the short term, the steel price has risen considerably.

According to the platform data, rebar spot and futures prices have increased significantly.As of October 10, the domestic top ten key cities tertiary rebar (Φ 25 mm) the average price is 3763 yuan/ton, up from September 30 to 59 yuan/ton, up 1.6%.Rebar futures rose more bright, 9 days to 3,633 yuan/ton, up 73 yuan than before the holiday, up 2.1%, back to 3,600 yuan.

Affected by the coVID-19 epidemic this year, all industries have been focusing on the resumption of work and production, and the steel industry has limited production.According to the platform data, as of October 9, the blast furnace operation rate of major steel enterprises in China reached 86.6, always at a high level. On February 21 this year, the blast furnace operation rate was 75.5%, falling to the lowest point in the year. Since then, it has been rising all the way to August 14, the blast furnace operation rate reached 88.3%, setting a new high for many years.

And in previous years to restrict production has been relatively strict, even appeared a limit on the phenomenon of price rise.Last year, for example, in 2019 is the 70th anniversary of the founding of daqing, in line with National Day activity, tangshan decided to start the heavy pollution in the city since September 24 weather Ⅱ level emergency response, long process steel mills performance for B grade, sintering, pelletizing equipment, lime kiln production, in production line, etc.Short - process steelmaking, independent sintering, pelletizing, rolling mill all stop.

According to the platform data, on September 20, 2019, the blast furnace operation rate of major steel enterprises in China was 82.3%, but only a week later, the blast furnace operation rate has been reduced to 68.5%, which shows the strict production limit.Limit production so that the news, steel prices have also followed the rise in volatility.

In fact, several waves of production restriction orders have been issued in relevant regions this year, but few have been fully implemented in accordance with specific requirements. The overall intensity of production restriction is not good. This is also due to the ultra-low emission transformation carried out by steel enterprises in recent years, and the production of many steel enterprises is not affected by production restriction, which naturally reduces the effect.

On the contrary, due to the high blast furnace operating rate, resulting in crude steel production at a multi-year high, inventory pressure increased.Since the outbreak began to improve in April this year, the average daily output of crude steel has been picking up and hitting new highs repeatedly.According to data from China Iron and Steel Association, in the middle of September, key steel enterprises produced 21.4559 million tons of crude steel and 20.4522 million tons of steel, with an average daily output of 2.1456 million tons of crude steel, up 0.42% month-on-month and 1.94% year-on-year.2,045,200 tons of steel.It grew by 2.3% month-on-month and 4.05% year-on-year.In terms of inventory, as of October 9, the social inventory of 29 key cities was 13.757 million tons, down 1.3% from The previous month and up 35.0% from the previous year. The long-term high inventory has greatly increased the contradiction between supply and demand.

According to the Iron and Steel Logistics Committee of The China Iron and Steel Association, PMI of the domestic steel industry in September was 43.9%, down 3.1 percentage points from the previous month, the fourth consecutive month of decline, reflecting the current steel market demand is not as expected, steel production has decreased accordingly, raw material prices have slowed down significantly, the steel market as a whole is not prosperous in the peak season pattern.

Therefore, from the point of view of the blast furnace operation rate, National Day before and after the change is not big, indicating that the production limit is not strong, but the production limit will have a certain positive effect on the short-term increase of steel price has a certain impact.On the whole, affected by high output and high inventory, steel prices will fluctuate in the near future, not much room to rise.