The profit of the steel mill is acceptable. Although there is environmental protection and limited production and winter maintenance, the steel output will be affected to some extent, but the initiative to reduce production will not be high. In the off-season, demand continues to be weak, and inventory enters the accumulation phase, but the current situation misses expectations, and the possibility of a unilateral downward trend in the market is low.

After experiencing a rally in November, the rebar futures price has entered the middle and late December, and has gradually begun to stabilize. The long and short battles begin at the line of 3,450-3,550 yuan / ton, and the market has a strong anti-fall atmosphere. The author believes that environmental protection and limited production and some steel mills' end-of-year maintenance have restrained production, but the profits of steel mills still exist, and it is difficult to see continued production reduction. Next, due to seasonal factors, demand for building materials fell, and inventory accumulation was inevitable. The carnival feast has been difficult to reproduce before the Spring Festival.

From a macro perspective, some economic data rebounded more than expected in November, financial data also picked up, and the economic situation has improved, but downward pressure remains high. According to the National Bureau of Statistics, from January to November, national fixed asset investment increased by 5.2% year-on-year, and the growth rate was the same as from January to October. Although fixed investment stabilized, it still lacked upward momentum. Infrastructure investment showed no improvement and continued to show a downward trend. Infrastructure investment from January to November increased by 4.0% year-on-year, a growth rate of 0.2 percentage points lower than from January to October. Manufacturing investment fell again after picking up in October. On the whole, the domestic economy is still under pressure, which can be confirmed from the "steady growth is still the top priority" in the Central Economic Work Conference. Judging from the analysis of the information transmitted by several important central conferences recently, the Central Economic Working Conference proposed that funds should be directed to areas such as supply and demand that benefit from both supply and demand, and infrastructure shortcomings with multiplier effects. The Ministry of Finance also issued some new advancements in 2020. Increasing the special debt limit by 1 trillion yuan will further increase counter-cyclical adjustment policies to support economic growth, which means that infrastructure investment in 2020 is worth looking forward to.

From the perspective of supply and demand, from November to mid-December this year, the weather conditions in the country are relatively good, and some parts of the northern region have started more construction. The construction sites in the southern region are in full catch-up period. The corresponding increase in production did not occur, and there was a mismatch between supply and demand. In addition, the stable growth policy introduced by the state in early December boosted market expectations, and a wave of steel prices ushered in a surge. However, in late December, the weather began to cool down. In addition to the advance of the Spring Festival this year, the construction period will end earlier. It is an indisputable fact that seasonal transactions have become weaker. The growth rate of newly started floor space in November was -2.9%, which was the first negative value in the past 20 months, which reflected to a certain extent the downturn in the real estate market's expectations for future consumption. In November, the average daily output of crude steel increased year-on-year, and the crude steel output of key steel companies in early December showed no sign of decline. According to the statistics of the China Iron and Steel Industry Association, the average daily output of crude steel from key steel companies in early December 2019 was 19.672 million tons, an increase of 25 million tons and an increase of 0.13%, indicating that the supply side is generally strong.

It is worth noting that, on the one hand, the end of the year is approaching, and the pressure to withdraw funds has increased; on the other hand, although steel mills in the northern region have successively introduced winter storage policies, the current steel prices have not reached the ideal position. The "pool" effect is not very obvious. Wind data shows that the social material inventory of building materials has risen for four consecutive weeks. As of December 20, the rebar inventory in major cities across the country was 2.9593 million tons, an increase of 2.2% from the previous month. The author analyzes that this is mainly the result of the centralized storage of resources in transit and the decline in demand. As a whole, the data is still lower than the same period of previous years. Therefore, the current output does not show a significant decline, the recent increase in inventory is relatively limited, the recovery rate is slower than expected, and it is expected that there will be more room for the inventory recovery in the later period. Therefore, the contradiction between supply and demand will be more prominent in the next period of time, and the price will fall and fall. However, the price of raw materials has been very strong recently, and regional spreads have contracted significantly, so there is also limited room for short-term rebar price declines.

On the whole, the profit of steel mills is acceptable. Although there is environmental protection and limited production and winter maintenance, the steel output will be affected to some extent, but the initiative to reduce production will not be high. In the off-season, demand continues to be weak, and inventory has entered the accumulation stage, but the current situation is less than expected. The possibility of a unilateral downward trend in the market is low, and the short-term steel market as a whole may be weakly oscillated. In the later period, focus on the accumulation speed of inventory.