Steel traders fear of heights as hot coil exceeds supply and steel rebar hits two year high

Recently, raw fuel iron ore, coke, scrap steel and so on continue to rise sharply.As of December 18, steel Home hot metal cost index rose 3.53% month-on-month, 9.8% month-on-month, and 25% month-on-month.

Up to the close on December 21, the rebar 2105 contract rose by the daily limit to a high of 4,460 and a low of 4,272. It ended up 212, or 4.99%, with 1.16 million positions held, down 14,000, reaching its highest level since August 2018.

Meanwhile, according to foreign media, on December 16, the value of hot-rolled coil (hot rolled coil) from the factory in northern Europe was estimated at 646 euros ($785)/ ton, up 42.7 euros/ton month-on-month and 117.3 euros/ton month-on-month.According to the Nordic market news, Scandinavian steel mills are considering a new round of price increase, some analysis forecast hot coil ex-factory price may be raised to 700 euros/ton, one mill last week had a factory price of 680 euros/ton.

Affected by the increase in downstream demand, hot coil futures up sharply at the beginning.As of 9:12 am, the main contract of hot-rolled futures was quoted at 4,735 yuan/ton, up 4.83 percent, hitting the daily limit of 4,742 yuan/ton, the highest since the contract in May 2014, according to Data from Wenhua Finance & Economics.To this, the home of steel, a senior analyst at Du Hongfeng for the huaxia times reporters that hot roll surface, the southern and northern region steel goods before April 2021 issue of the hot rolled orders has been full, the order of hot roll is basic to shipment to 4 - in May 2021, international hot roll high prices at the same time, the import quantity is limited, so the European market of hot roll shortage of supply.

In addition, cold roll, according to the European market news, the current cold roll market resources supply shortage.Similar to the hot roll situation, steel mills in southern Europe and Northern Europe have abundant cold roll orders before the delivery date of April 2021. The delivery date of cold roll orders at present is basically scheduled to April to May 2021, while there is almost no cold roll resources in the spot market.However, the current European buyers believe that prices will not continue to rise in the long run, the risk of inventory replenishment at this stage is too high, so the main on demand procurement.

Peng Bohan, an analyst with Zhongyuan Futures, told Huaxia Times that the economic recovery at home and abroad continued in the fourth quarter, and the steady recovery of manufacturing industry led to a continuous rise in hot-coil consumption. The demand for steel used in automobiles, household appliances, machinery, ships and other manufacturing industries accounted for 26% of the downstream demand.Therefore, the continuous growth of the manufacturing industry is conducive to promote the upstream raw material hot coil consumer demand.

According to the latest data from the Bureau of Statistics, the growth rate of real estate and infrastructure fell in November, while the growth rate of manufacturing rebounded by 12.5%, 8.8 percentage points higher than that of October. At the end of the year, automobiles entered the traditional peak season. The industrial added value of automobile manufacturing increased by 11.1% year on year in November, far exceeding the national average of 4.1 percentage points.In terms of overseas economy, although the epidemic is still repeated, overseas consumption and investment are also in the process of continuous recovery. Overseas steel demand will be more active from intermittent export to direct export, and the price of overseas plate is also rising continuously.