Inventories and the reinstatement of steel mills will suppress steel prices

　Steel prices are suppressed. At present, although the profit of the steel mill is lower than before, it still has production power under the condition of high profit, and the supply will still increase. End demand rebound but lack of stability, spot transactions are still not smooth, the market cautious optimism. The social inventory of rebar has climbed to a high of 10,823,900 tons in 2018, but the terminal demand is gradually released as the downstream construction increases. Mysteel data showed that the social inventory of rebar had fallen to 8,045,500 tonnes as of April 19. However, although the total inventory has already entered the downward channel, but high inventory base is still an important resistance to the recovery of steel prices. After march, with the lifting of environmental production restrictions, the focus of the market game shifted from steel traders to steel traders and steel mills. At present, the spot price is close to the steel trade merchants had winter cost line, even some merchants losses, although the merchants sold will is not strong, but the market inventory pressure, some merchants have to sales prices, some steel mills have been resuming production, rebar production continues to increase, so steel prices rebounded. Steel mills still have the power of production. Since the state cracked down on "floor steel", increasing production intensity and winning by volume is undoubtedly the best choice for steel mills to seize the "reform dividend". Statistics show that since January 2018, the proportion of domestic profitable steel mills has been maintained at about 85.28% for a long time. As of April 13, the figure has gradually recovered compared with the beginning of the year, but compared with the continuous downturn in late march. Although the operation rate of the national blast furnace is maintained around the 60% level for a long time due to the continuous increase of environmental protection policy, it still keeps a slight upward trend. In the later stage, as more and more local production limits are lifted, the future output of rebar will also show a sustained upward trend. Based on the analysis of the relationship between production capacity and output, although earlier positive incentives such as delayed release of production after the end of the heating season for hebei steel plants, and continued temporary production restriction measures for non-heating season, in the long run, the positive factors above are only to restrain the release of production capacity, but not to restrain the intensity of production. Using high quality iron ore and converter add scrap steel blast furnace will increase production in disguised forms, and so it is difficult to form a major support to the price, and the electric stove for the blast furnace has inherent advantages, environmental protection and guided by policy support and encouragement, so the blast furnace was gradually replaced by electric furnace will also become an important trend, but the premise is that steel profits continue to remain high. Construction starts in downstream areas have been quietly picking up. However, judging from some major downstream real estate, infrastructure and other industries, it is impossible to say whether the demand of this year can maintain the strength of last year. Combined with the fact that capital is tighter than last year, material prices are higher than last year, and even if total investment remains unchanged, there will still be a decline in effective demand unless there is further expansion of infrastructure projects or more flexible capital flows. Mysteel research, according to the results of early April 2018 building materials release speed downstream demand, surveyed 738 traders building materials daily volume of 461000 tons, the highest volume once reached 500000 tons, but the market clinch a deal the stability is not strong, the majority of steel is still at a low price to clinch a deal is given priority to, steel prices have not been recognized by the market, many times the downstream procurement cautiously. On the whole, although the terminal demand of rebar steel recovered and the inventory accelerated consumption, the low volume still dominated, steel price rise difficulties, the future is still cautiously optimistic.