Poker Interview | Chen Mo: Where in the fourth quarter, “the strongest” strong hot rolled in? Iron ore will come from behind?

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Lead: Where in the fourth quarter, “the strongest” strong hot rolled in?

Interview Guest | period now manager of ferrous metals division ChenMo reprint please contact the poker author Jun (ID: puoker) Authorization key point

1 with respect to the fourth quarter of hot rolled thread is stronger because: First, the conversion of the limited molten steel; Second, there is the expected end of the market for manufacturing replenishment, the demand for building materials
than weak; Third, limited production “26 + 2” policy influence the supply of hot rolled relatively larger in terms of thread.

2. Think of hot rolled stock has reached a short-term high stage, before the New Year’s Day may be immune to a breakthrough.

3. Not simply to “26 + 2” limited supply and production area to represent the supply and demand of the market, changes in the electric arc furnace and increase the size of the increment other than the limited production areas should be concerned about.

4. For now the market acceptance of high prices of hot rolled resources is not high, turnover is more difficult, the overall demand is quite limited.
Follow-up in the macro side, speaking for infrastructure and real estate is still tight, continuous rise in market interest rates, is not conducive to continue to enhance the positive attitude of the downstream industry investment in fixed assets.
So for the entire Black, relatively speaking, we are more bearish.

5. Mine seasonal reduction in shipments, increased after the end of the heating season demand and limited production impact on the overall increment of crude steel, iron ore, lead to spring next year after a relatively strong side of the pattern of the finished product.

6. It should also be concerned about the changes HRC inventory data, once the hot coil end user demand replenishment operation is completed, it will be directly reflected in the overall inventory changes out, relying on market demand-driven stage
along with it over.

7. In the disk operation, the current location of the volume difference is not suitable for screw opportunities focused on iron ore, promising anti-sets operate at the right price, buy or sell, 1801 1805
ore contracts for the 1801 iron ore contracts, also look for shorting opportunities.

PUOKE Interview Heavy guests

ChenMo , Working at an internal motherboard
listed companies ferrous metals division of the current manager, have a more in-depth study of the iron ore and steel, familiarity with the current development of domestic policies black industry dynamic impact assessment on the black whole industry chain, has abundant cash resources in the industry channels
and information resources.
Along with good basic economic theory and macroeconomic analysis skills, strong ability of sensitivity and judgments, as well as good analytical and writing skills data, skilled use of economic analysis and the future status of macroeconomic policy disturbance variables
to undertake a comprehensive assessment.
Black building materials industry research is several mainstream media repeatedly published and received wide acclaim in the industry.

full interview:

➤ Poker Finance: Recently on the market seems to agree that the fourth quarter will be the hot rolled black trend line
most varieties, which, how do you see?

Chen Mo: for hot rolled, in fact, in the beginning of June, I sent a about its research report, pointed out that HRC will be end of the third quarter,
that is the beginning of August, a relatively strong start thread.

This is based on three reasons:

First, because of the limited, a Steel producers are more sensitive to the conversion of profits varieties, generally based timber
variety profits flow of molten iron for active transformation.
Since the early mills to prefer better profit levels of thread, tend to choose the overall production of finished product or thread Cape billet rolled thread used to put on the market, it makes the overall coil inventory could not be effectively accumulate.

Second is the end, there will be a market for manufacturing replenishment expectations, but for the infrastructure sector, which is the demand for building materials is concerned, Que Shibi weaker.

Third, because the disturbance policy side, main operating logic compared to pre also changed.
We may all know, limited production “2 + 26” policy influence the supply of hot rolled coil, relatively speaking larger thread.

summary of terms is to promote demand reduction in the supply of superposition, which is the cause of the fourth quarter hot rolled thread on the strong side relative to the run.

In addition, from the data, before the whole building stock is rising, and according to the laws in previous years in terms of changes in the inventory cycle, from two weeks before the start of the follow-up to the inner twenty-three weeks time,
We should all be a stock downward trend, but stocks before this week rise, not fall, the magnitude of the expected relative to the inventory is not enough, it also led to some of the thread even more vulnerable.

➤ Poker Finance: So you think the fourth quarter is strong thermal volume terms relative to the thread, but if we look at the individual hot volume of the breed, it also
It will be stronger trend yet?

Chen Mo: to see if this hot rolled varieties alone, then I think it will not continue to be strong up.
Given the current market acceptance of high prices for resources, there are some problems, and because of environmental problems downstream demand also had a relatively large extent.
It can be said, HRC spot in the short term has reached a high stage, at least until the New Year may be immune to a breakthrough.

you can see, this time the highest spot price on Monday, opening the Jiangsu region offer in 4250, but follow-up due to the weakening disk, followed it down to 4210.
I personally think that the short-term spot price of 4250 is concerned, it is the high stage, very difficult to break through 4300 points.

may also view “26 + 2” on the thermal level of limited production volume of supply exceeds demand, therefore, the final volume is good heat.
But the problem is that, We can not just look at the magnitude of production areas within the limits of the “26 + 2”, also should be concerned about the size of an area outside the “26 + 2” may appear to increase production.

From the data I get the current point of view, “26 + 2” will affect the total production of pig iron in about 5300-5500 tons.
However, the market, the incremental electric arc furnace we did not have long to pay attention to the fact that electric arc furnace production has been increasing, it is possible to compensate for the reduction due to limited production to some extent.

In addition, the “26 + 2” to influence policy are two sides of supply and demand, even in limited areas within may ultimately affect the supply exceeds demand, but we take into account that my analysis
several reasons, we can no longer simply to supply and demand “26 + 2” limited production areas to represent the entire market supply and demand.

So, increase the size and change the current increment other than electric arc furnace should be our main concern is to limit production area.

recent data from China Steel Association announced point of view, the continuing rise in crude steel production, this may also explain the country’s crude steel production did not decline.
So, I am not optimistic about the “26 + 2” policy will have a particular impact on the country’s overall supply of steel production.

➤ Poker Finance: How to present the fundamentals of thermal paper?
Follow-up in the macro side, if there is anything to look forward to?

Chen Mo: Overall, I think the hot coil current fundamentals no significant change compared with the pre, inventory levels are only slightly.

I also mentioned earlier, is now the market acceptance of high prices for resources is not high, turnover is difficult, and secondary hot rolled sheet by the south, that is, hot rolled
Stock variations secondary processing into cold-rolled sheet or galvanized, the market demand for hot rolled quite limited.
This is reflected onto the disk, also resulted in early fall now, the recent rebound, but the overall center of gravity down the price of ending.

From a macro framework of the follow-up is concerned, Q3 Q4 quarter to quarter end, still adopt a neutral fiscal policy strategy, but for infrastructure and real estate is still tight in terms of market
continuous interest rate rise, is not conducive to continue to enhance the positive attitude of the downstream industry investment in fixed assets.
So even if it is from the point of view 18Q1 this time, the macro demand is still weak, funding is tight situation.

And, in my analysis, in the heating season to limit production to its end of the period, there will be an invisible growth, so for the entire Black, relatively speaking, I
comparison is empty, the hot rolled thread is also relatively strong, moderate decline.
And after the spring next year, iron ore but may be stronger.

➤ Poker Finance: the logic of the current iron ore can be said to be relatively clear, that it will be relatively smooth trend of decline, do you think some of the follow-up of iron ore will be strong reasons for what?

Chen Mo: We currently bearish iron ore is indeed logical support, inventory very large indeed, on the whole not like when in June of this year, because of the high
product scarcity of resources, structural contradictions rising inventory support their prices.

And I said follow-up will be stronger because, after the spring next year, limiting the production of steel heating season ended, overall crude steel production will lead to an increase in demand for iron ore, the demand for high-grade resources
It will be significantly increased.
And, when a high probability there will be a wave of replenishment of expectations, and then superimposed the beginning of a period of low supply in Australia, iron ore various reasons leading to the strong side relative to the terms of the finished product is also very reasonable.

summary is concerned, mine seasonal reduction in shipments, increased after the end of the heating season limiting the production of crude steel demand and the impact on the overall increment, resulting in iron ore next year relatively strong side of the finished product
pattern.

➤ Poker Finance: So, what follow-up issues that we need to pay attention to it?

Chen Mo: because on the hot roll this species, I also mentioned earlier, has reached a stage of high short term
point, and I remember that I have written about in poker questions and answers, pay attention to the spread of hot rolled and thread.
If the price difference between the two can reach 400-450 this level, you can consider making some positions on the spiral configuration difference volume,
because I do not think the difference will be that the volume snail, can reach more than 500 like last year’s
Level.

In addition, for hot rolled coil, still have to pay attention to changes in the stock it.
because the hot spot volume reached at this price, then taking into account the exchange rate, exports this year should not work, but the overall situation of late, the manufacturing industry, including shipbuilding, containers, vehicles and other industries, there will be a complement
library end of the action.
The Once the replenishment end, it will reflect the change in the overall inventory directly, relying on market demand-driven stage along with it over.

➤ Poker Finance: What advice can share it with us in the disk operation?

Chen Mo: At this position, screw volume difference is certainly not suitable to do, spread between the two is about 300, as I just mentioned, it is best to wait until 400 or more.
If you want to do more than simply hot roll, I do not recommend such action.
Clearer market fundamentals, the hot coil is stronger relative to the thread, rather than to continue strength hot rolled, HRC alone do more, is very dangerous.

For me personally, the opportunity to present my main concern in iron ore, from the fundamentals of my analysis point of view, more optimistic about the anti sets at the right price
operation, that is, sell 1801 1805 contract to buy ore.
In addition, For the 1801 contract, I was more pessimistic, the downward trend is more obvious, and therefore tend to look for shorting opportunities.
but there may be a strong side, Masukura may rise, that is, temporarily or be patient, if the disk price can reach 470 or more, preferably to 480-500, then do more short-term
relatively speaking, only safer.

 

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