May high Fall back June or concussion adjustment

Looking back on the May, the domestic market rebar prices gradually fell from the high, from the "51" holiday after the first trading day of 4145 yuan/ton, to May the last week of 4086 yuan/ton.

　　From the cost side, as iron ore and coke and other major raw materials prices continue to rise, steel production costs increase, rebar profit space narrowed. From the supply and demand side, in May, the production of 5 large steel varieties hit a new high, an increase of more than 800,000 tons, more than 8%, the main increase from rebar. According to industry body statistics, the output of sample threaded steel reached 3.78 million tons/week, an increase of 650,000 tons/week year, a increase of 21%. The increase in the output of threaded steel is so obvious, on the one hand, because with the deepening of the supply-side structural reform, the economic benefits of the steel industry have improved dramatically since the implementation of a series of measures, such as "steel" and environmental protection production restrictions, and steel enterprises have been driven by this drive to increase production power;

　　", Production capacity has been released, coupled with the steel mills themselves to carry out technical transformation, productivity has also been improved."

　　On the demand side, with the Lixia in early May, precipitation increased throughout the country, infrastructure projects were affected to a certain extent, market demand has receded, inventory decline has narrowed, and overall steel demand has declined.

　　From a macro perspective, in May, the United States announced the imposition of tariffs on 200 billion of dollars in Chinese products, a major bearish event that also had a certain impact on the fall in the price of rebar. Entering the June, the rebar price is expected to be volatile adjustment.

　　Mainly based on the following factors: From the supply and demand side, the production of threaded steel will continue to remain high. The reason is that the environmental protection production restrictions policy tends to be flexible, the current steel mill profits are still relatively considerable, steel plant production enthusiasm is high. Taking Tangshan, Hebei province as an example, the April Tangshan in Hebei Province began to implement non-heating season staggered peak production, but this year's production restrictions policy and previous years some different-this year production restrictions will be implemented in phases, while the production restrictions object will be extended to the converter.

　　It is estimated that in May, Tangshan City theory affected by production restrictions iron production should be in 60,000 tons/day or so, but the actual impact of only more than 30,000 tons/day, production restrictions on the supply of the impact less than expected. On the demand side, entering the June, the south of China entered the rainy season, the north generally ushered in hot weather, infrastructure projects affected by the weather to a greater extent than May to further deepen, demand will fall further.

　　According to this forecast, demand will be difficult to improve in the short term, inventory or accumulation, steel prices still have a greater downward pressure. From the cost side, the continued rise in raw material prices may affect the pace of operation of the steel market. Iron ore prices have risen sharply since the dam crash in Brazil at the end of January, and have been affected by the Australian hurricane in the late stages, and mine shipments have been significantly affected, while in the context of the relatively lax production restrictions policy this year, blast furnace capacity utilization has continued to be higher than in the same period last year, with iron ore demand consistently high Iron ore prices are still expected to operate at high levels in the short term.

　　In addition to iron ore, another important raw material Coke price has also continued to rise recently, it is expected that the late Coke price is easy to fall, will form a certain support for rebar prices. Accordingly, the June rebar price is expected to be volatile adjustment.

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