Strong short-term demand for steel continues

Demand has periodically exploded, but high inventories material of solar greenhouse still depressed profits. This week is the second week of the demand observation window, and the rebar sheet needs to remain strong, continuing to hit a record high of 4.75 million tons. Two consecutive weeks of strong demand suggest that this year’s peak season will be a quick destocking route. Now the rebar inventory is 75% higher than that of the same period last year. By the end of the peak season in May, the inventory is expected to be 30%-40% higher than that of last year. High inventory will remain normal in the later period. It is worth noting that high inventories have clearly suppressed the upside of steel profits.

In the past two years, if the current supply and demand structure appears, the rebar profit will easily break through 500 yuan, but the current rebar profit is still suppressed in 300 yuan, or at a low level. Hot coil and cold coil profits from the beginning of the year continued to decline. According to the current price, hot coil basically no profit, ordinary cold coil is in the loss range. In general, under the coexistence of periodic supply and demand mismatch and high inventory suppression, continue to maintain the unitized curtain wall system in the second quarter of a small expansion in profit view, the upper limit of about 500 yuan. Beware of steel demand cycle top inflection point. Current rebar demand is strong, but this year’s stage of strong demand can’t be linearly extrapolated to the whole year, we are still cautious about the late steel demand. Real estate steel demand is likely to appear in the top of the inflection point this year, has appeared some signals worthy of attention. Since 2016Q1, real estate has started a super destocking cycle, and 2020Q1 is the first time that there is an obvious turn of inventory, and real estate may gradually enter the stage of oversupply. From the point of view of short-term logic, real estate developers have sufficient incentive to push a large amount of disk in the peak season to make up for the lack of sales of glasses greenhouse in January and February, so that the periodic supply reaches or even exceeds the level of last year’s peak season.
But the overall housing demand is difficult to return to last year’s level, the current 30 cities in large and medium-sized commercial housing transaction area is still prone to the bottom of the past 10 years. Under the catalyst of the epidemic, the contradiction of oversupply of aluminium curtain wall has been intensified in advance. With the decrease of residents’ income and the lack of loosening of credit policies, the housing demand in third-tier and fourth-tier cities will start to decline, and the inflection point of oversupply of real estate will start from this year.