The macroeconomic data released recently indicate that the domestic economy continues to recover stably, national production rises steadily, demand stabilizes and picks up, and market expectations are improving. The rebar futures market has once again seen a soaring market that easily breaks through 3900 points. In the near future, steel futures prices will continue to fluctuate at a high level.

The rebar futures market will continue to fluctuate at a high level

At the end of September, rebar futures prices began to bottom out. After that, the price of rebar futures fluctuated continuously, and by the end of November, it basically returned to the peak level in mid-to-early August.

Statistics show that on September 25, the closing price of the main rebar futures contract bottomed, dropping to 3522 yuan/ton; on September 29, its highest and lowest prices bottomed at the same time, falling to 3548 yuan/ton and 3501 respectively. Yuan / ton. On September 26, the main closing price of snails began to show signs of recovery, and its highest and lowest prices began to rebound on September 30. In October, rebar futures prices continued to fluctuate higher. In early November, the price of rebar futures increased by leaps and bounds. The main closing price on November 9 reached 3,859 yuan/ton, the highest price on November 10 reached 3888 yuan/ton, and the lowest price on November 11 reached 3824 yuan. /Ton. Comparing the "peak-valley gap", we can see that during this round of price increases, the main rebar contract prices increased by: closing price 337 yuan/ton (up 9.57%), the highest price 340 yuan/ton (up 9.58%), and the lowest price 323 yuan/ton (up 9.23%).

Since mid-November, the rebar futures price has fluctuated all the way, and the overall price has continued to rise. As of the close at 3 pm on November 17, the closing price, highest price and lowest price of the main rebar futures contract (RB2101) were 3919 yuan/ton, 3920 yuan/ton and 3848 yuan/ton, all higher than the recent peak Price. The closing price increased by RMB 83/ton (2.16%) from the settlement price of the previous trading day. The closing prices of rebar 2105, rebar 2104, rebar 2103 and rebar 2102 were 3712 yuan/ton, 3725 yuan/ton, 3748 yuan/ton and 3788 yuan/ton, respectively, which were all higher than the settlement price of the previous trading day. The ranges were 1.87%, 1.80%, 1.93% and 1.94% respectively.

The spot market prices rose rapidly, and demand fell slightly. In the spot market, since November, the overall performance of steel prices has been rapidly rising, and overall transactions have been good. According to the monitoring of relevant agencies, as of November 13 (last Friday), the average price of Φ25mm Ⅲ grade rebar in 10 major cities in China was 4,075 yuan/ton, an increase of 157 yuan/ton over the previous weekend and an increase over the same period last month. 293 yuan/ton; the social inventory of construction steel in 29 key cities across the country was 5.676 million tons, down 569,000 tons from the previous weekend, or 9.11%, 29.54% lower than the same period last month, but 61.24% higher than the same period last year.

The feedback from the merchants shows that the speculative demand in the market fluctuates with the rise and fall of steel prices, and the substantive purchase demand of downstream users is flat. On the supply side, construction steel mills and market inventories have been accelerating the digestion recently. Spot resources of construction steel in some regions are relatively short, and steel mills are willing to pay more. In terms of market mentality, because steel prices have risen too fast and transactions of high-priced resources have slowed down significantly, the overall trend is cautious. In the near future, due to the rush to work in winter, demand is still expected, which will form a certain support for market prices. However, market fluctuations and overall weakness should be a high probability event.

The supply of resources has grown substantially, the growth of demand has been relatively slow, and price increases are unsustainable. On November 16, the National Bureau of Statistics released a number of macroeconomic statistics. The data shows that the national economy continues to recover stably, production in all regions and industries across the country has risen steadily, demand has stabilized and picked up, prices have generally stabilized, and market expectations have improved. In October, the value added of the industrial enterprises above designated size nationwide increased by 6.9% year-on-year and 0.78% month-on-month. Among them, the manufacturing industry increased by 7.5% (ferrous metal smelting and rolling processing industry increased by 11.2%). In the same period, China's manufacturing purchasing managers' index was 51.4%, which was above the threshold for eight consecutive months.

In October, domestic crude steel output was 92.2 million tons, a year-on-year increase of 12.7%; steel output increased by 14.2%; raw material prices fell by 6.0%; industrial producers' ex-factory prices fell by 2.1%; industrial producers' purchasing prices fell by 2.4%. From January to October, domestic crude steel output was 87.93 million tons, a year-on-year increase of 5.5%; steel output increased by 6.5%; housing construction area increased by 3.0%, housing construction area decreased by 2.6%, land purchase area decreased by 3.3%; raw material prices fell 6.1%; the ex-factory price of industrial producers fell by 2.0%; the purchasing price of industrial producers fell by 2.6%.

The report of "Market Price Changes of Important Production Materials in Circulation in Early November 2020" shows that in early November, the average market price of rebar (Φ16mm~25mm, HRB400E) was 3897.5 yuan/ton, which was higher than the average price in late October. 139.2 yuan/ton, an increase of 3.7%.

At present, the domestic market is generally stable and improving. However, the global new crown pneumonia epidemic is still spreading, the international political and economic environment is severe and complex, and uncertainties are increasing. Coupled with the contraction of the domestic real estate market, demand growth is limited, and transactions have fallen sharply. At the same time, rebar output continues to increase in volume and inventory digestion slows. The situation of oversupply will directly restrain the upward price of steel. However, the increase in demand from downstream industries in winter and steel mills facing environmental restrictions on production may alleviate the oversupply of steel resources, which will bring certain benefits to prices.

Judging from the current situation, negative factors have the upper hand. The domestic construction steel prices will fluctuate at a high level and operate within a narrow range in the short term, and the steel futures market prices will also show a trend of oscillating and decreasing. The author predicts that the rebar futures prices will fluctuate at a high level in mid-to-late November and will run weakly.