Poker Interview | Dong Yun: Thread season really in line with expectations? I’m afraid bloom again and eventually became “empty”

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Lead: How to steel funds face the situation?
How to start blast furnace production?

text | Zhejiang regional head of sales at Dong Yun Zhongtian Iron & Steel reprint please contact the author poker king (ID: puoker) Authorization

traditional peak season, “Golden September and silver October,” in sight, market speculation and the speculation of the season whether we can expect to achieve?
How supply?
How demand?
How Steel funds face the situation?
How to start blast furnace production?
The policy side do not want to screw rose specific circumstances and how?
To unlock the answers to these questions, today, poker content teams invited struggle for everyone in answering the steel market in Zhejiang regional head of Zhongtian Steel Sales of the first line of Dong Yun doubts.

key point

1. On the current data, the entire stock of inventory is high, because this time the growth rate is indeed
Big.
So, in the future once the demand can not keep up, stock sell-off will be more serious.

2. Is currently supporting steel price trend of the most direct logic, that is, we expected the “Golden September and Silver October,” season, and secondly, the supply-side reforms are still in progress, so, resulting in the overall supply situation still exists
.
Thread

3. From the point of view currently marketed, this part of the EAF thread, not as much on the market.
In other words, it has been put into this part of the electric arc furnace capacity, and not much is released, but more and more threads subsequent supply of essential foregone conclusion.
The same time that demand in the second half may be a problem.

4. That the “Golden September and Silver October,” Now the price shore up the probability is relatively small, there will certainly be a callback, but the depth is not too deep, either futures or spot, the callback rate reached 300-400
It is possible.
.

5 follow-up recommendations concern: first, the North cut heating season problems; second, the financial side of the problem; third, September Fed rate hike issue.

6. I think this year should be the high point has emerged, that is, at the level of 4000 points.

PUOKE Interview Heavy guests

Dong Yun, Zhongtian Iron & steel, head of sales at the Zhejiang region, sales in seven years, the fundamentals for steel and even black
have their own unique understanding of futures trading very interested to participate in futures trading for three years, they will conduct their usual futures analysis, has its own micro-channel public number “black gold log.”
Micro-channel public number with its own operating records and ideas.

full interview:

➤ Poker Finance: the recent trend fluctuated considerably thread, then the current spot price situation how?
What kind of logic is currently supporting steel price is?
Can you analyze for us?

Guests Dong Yun: recent spot prices are still relatively more stable, for example, today, the price remained at Hangzhou thread 4000, for now
in this integer position, spot prices still have some support.
Although that is down from the highest point from 4200 down to 4000, there are about 200 fell, but fell after this position now, the market also store goods dealers, also part of the bargain-hunting approach.
And these people come in to buy the dips, mainly based on optimistic when the “Golden September and Silver October,” season, the market demand.
However, the current data, the entire stock of inventory is still high, because this time the growth rate is indeed relatively large.
So, in the future once the demand can not keep up, stock sell-off will be more serious.
The most direct logic

The current support steel price, that is, everyone expected the “Golden September and Silver October,” season, after all, this is a traditional peak season, when demand Ye Hao, Ye Hao turnover, will
heavy volume.
It is also downstream, including the site real estate, infrastructure, etc., after the high temperature, taking advantage of the cool weather, this time for the job node, stepped up to complete the schedule.

Second, the current supply-side reforms are still in progress, so, resulting in the overall supply situation still exists.
The question now is, steel mills reduced production, can fill the gap on hot metal furnace on the new, but also a focus of the market.
The current situation, most people still think, it is not on the make up.

➤ Poker Finance: You just mentioned the problem in short supply, but also with a view, in fact, a large thread in the supply and demand side of the problem does not exist, mainly due to market sentiment, which
point of view, how do you see?

Guests Dong Yun: I believe that the current thread is still missing, but the future may not be missing.
It really depends on whether the electric arc furnace production, or “Golden September and Silver October,” demand could decline.
In fact, the past few years is not busy season, off-season is not short, once the season is expected to fall, selling pressure will be more serious.

Regardless of thread stock futures Ye Hao, the trend is quite normal, in terms of fundamentals, there is a strong logic to push.
Now many fund Ye Hao, Ye Hao private equity, futures corporations, or research and understand the extent of the thread fundamentals are very professional, because the fundamentals in this area is relatively easy to study.
On the supply side, that is, those existing thread factory supply; demand side, demand only focus on the most important points, real estate and infrastructure.

So why do I say that the market is still threaded in a tight balance state?
These days there are research reports reflect the country’s 16 provinces this year, total new electric furnace 50, the total nominal capacity of 3580 tons, according to the Ministry of capacity conversion table to calculate the theoretical production capacity was 37.19 million tons / year, of which 13.97 million have been put into operation
tons, accounting for 37.56%.
However, we are selling from the threads on the market point of view, this part of the electric arc furnace production of thread, not as much in the market.
In other words, it has been put into this part of the electric arc furnace capacity, and not much is released.

While it is not how electric furnace production of threads appear, but in the future, I am sure there will be.
Now, for electric arc furnace plant is, there are some issues that need to be resolved.
First, the cost of production two main considerations, first, and second, the price of scrap prices.
As long as there is a certain logic of profit margins, will produce no profit margins, it will not go to production.
Now the price of scrap has been restored to a higher position, in which the price of graphite electrodes in particular, higher.
So, in terms of cost, compared to traditional blast furnace steel mills, the advantage is not large.

Secondly, at this stage the problem furnace Furnace also subject to a lack of production workers.
From the production point of view to consider, such as the original design capacity of 2,000 tons / day, but due to technical reasons, the proficiency of reasons, we can only produce 1,000 tons / day.
But over time, the technology can improve proficiency, coupled with the future to stabilize the price of graphite electrodes, the circuit will yield a faster recovery, and accordingly, the yield will be able to get some thread to make up.

➤ Poker Finance: Thread prices are still high, and the “Golden September and Silver October,” whether the price support, the problem is the market is very concerned about this, how do you see?

Guests Dong Yun: I think now the price shore up the probability is relatively small, there will certainly be a callback, but the depth is not too deep.
At present, mainly because of the impact of policies end.
From the government’s performance, their attitude is, do not want to rally, do not want to crash.
So, about the current 4000 prices, should be the “top policy”, and then further up, the damage to the downstream will be very large.
Meanwhile, with the recent environmental problems, concentration and control, the downstream demand for greater impact.

So, the “Golden September and Silver October,” season may be expected not everyone thought so good, to once perceived market demand is less than expected, it is likely there will be a large callback, the callback rate reached 300-400
It is also very possible, either futures or cash.
Now because of the combination of the two has been very close now, we are all concerned with, so the two will react the same time.

➤ Poker Finance: How to thread the fundamentals?
They are most concerned about how the social inventory?

Guest Dong Yun: from the supply point of view, will supply more thread, wherein more than a steel furnace, comprising a steel furnace,
they are threaded in production capacity continues to increase.
Blast furnace steel mills by increasing scrap, increase grade iron ore into the furnace to increase hot metal production as much as possible.
The core reason is that profits are too high now steel mills, steel mills that will choose to use the best ore, coke best, these, desperate to make their production reached the highest.
Unless the decline in the level of profits or steel policy, environmental protection, there are changes, otherwise, without the influence of other external factors, such mills full production status does not change.
Electric furnace steel mills have also been analyzed, the same yield only go higher until profit margins narrowed.

From the demand point of view, I think, demand in the second half may be a problem.
First, the policy side does not support the rally, we have now introduced a number of policies and Steel Association has come out propaganda.
Second, capital and society as a whole is also tight in the first half of the loan it has been put 60-70%, then the loan amount is limited aspect of the second half of the bank is also normal.
PPP projects, bonds and other places may also be controlled, after all, the tone of this year, the financial sector is deleveraging, in this context, has led many state-owned background of the tray, local debt, etc., which need funds to support the project, both
It may be subject to a certain extent.
To the duration or, construction rhythm or, perhaps eventually slow down.

The current inventory thread, compared to last year is an increase, but last year was a special year, the year of the overall inventory is low.
In fact, I think the inventory problem, compared with last year’s significance, the most important thing is to pay attention to WoW, month on month, which was better reflect the dynamic equilibrium of the problem, and the problem of market sentiment, reflecting what is now the market
tight balance of supply or an increase or decrease in demand and other issues.
Thread is always a seasonal product, there are peak seasons, and seasonal difference is very obvious.

➤ Poker Finance: Follow-up question on what we need to pay attention to the news of the policy side?

Guests Dong Yun: First, cut the problem in northern heating season, in the end can not be executed?
How to enforcement?

Second, the financial side of the issue, whether it is tight or to maintain their current status?

Third, in September the Federal Reserve to raise interest rates, what might be the consequences?

➤ Poker Finance: prices for the subsequent thread What do you think?
Are there ascribed possible?

Guests Dong Yun: on the current futures price, the 4000 may be the short-term top position, the pullback, it should be able to reach the callback rate of about 400.
After correction, focus on the demand side can support, if we can support, it’s probably still bouncing back.
And I think this year’s highs should have been, that is, at the level of 4000 points.

follow the spot price and futures price trend is the same, but the spot could always be higher than 200 futures, stock futures premium become the norm.

➤ Poker Finance: Finally, in the disk operation, you have any advice you can share with us?

Guest Dong Yun: on the disk operations, now, or rhythm-based short rallies, stops 4000 may be provided.

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