2019 Steel market faces many nodes

Chen Xiaodong believes that the first is the “13th Five-Year Plan” to achieve capacity targets ahead of schedule, and the marginal effect of supply-side structural reforms in the new year is declining, which has been reflected in advance from the 2019 futures contract. Second, the fundamentals of the steel market in the past years are more on the macro level. In 2019, the global economy is facing downward pressure, and the growth rate may slow down. With the recovery of funds at the end of 2018, the steel market will show a multilateral situation in the first quarter of 2019. . Third, the supply-side structural reform policy may be diversified in the new year. In 2017, it will basically be “one size fits all”, and in 2018 it will be “fine cut”. In 2019, it will be “multi-political staggered” situation, policy changes to price The frequency of influence increases. Fourth, the high profitability of steel mills may be reasonable under the change of supply and demand structure. The previous profit level of 1,000 yuan/ton to 2,000 yuan/ton is affected by factors such as increased environmental protection investment and higher financial costs, and will return to five or six tons per ton. The normal level of one hundred yuan, the profit of each link in the industrial chain is relatively balanced. Based on the above analysis, 2019 is the turning point of the steel market cycle. The balance between supply and demand will make the price high and low points lower than 2018. The industry profit center will be reduced, and the market band opportunity will outperform the unilateral trend opportunity. Whether it is a steel mill or a trader, it is recommended to use "active offensive" to "tactical defense" to gain market revenue.

Chen Xiaodong believes that with the close linkage of the national period, the overall level of market participants and the involvement of financial capital, it is a good choice to use financial derivatives such as futures, forward contracts and options to avoid risks. The “waiting” state in the northwest region gives birth to opportunities. In 2018, the steel market in the northwestern region has been trying to avoid risks by intervening in financial operations with financial instruments. In 2019, the steel market in the northwest region will present innovative business models such as hedging and basis trading. (Source: China Metallurgical News - China Steel News Network)

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