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Can Hot Rolling Continue To Strengthen

- Apr 23, 2018 -

     

    In the first half of this month, the hot-rolling market was generally strong.


    The first week (4.2-4.6) coincided with the Qingming Holidays in the second half of the week. The trading day was short, the hot rolling market oscillated and the market opened at the beginning of the week. Under the upward adjustment of the billet, the spot market rose in the mainstream, and the market’s bullish atmosphere was clearly seen. As a result of mobilization, trader confidence increased, coupled with related futures held red, merchants quoted generally follow up, in which most areas in east China rose around 100 yuan. However, downstream demand has been slow to follow up, and procurement has been relatively cautious, with overall resource transactions being average. In the middle of the week, the volatility of the futures volatility was weaker, which undermined market confidence. In addition, the willingness of downstream purchasers was not strong. There were few stock preparations before the holiday and the resources were clearly deserted. Many merchants expressed that they could make profits.


    In the second week (4.9-4.13), the domestic hot rolling market oscillated to a certain degree, with East China, South China, North China, and Northeast China rising by 20-60. After the opening of the holiday, the market opened with a rather strong wait-and-see mood. It coincided with the fact that on Sunday, futures did not open and could not provide guidance to the spot market. As a result, traders tended to focus on market operations and the overall turnover of resources was limited. Afterwards, the associated futures will be staggered in red and green, and the overall willingness of the hot-rolled spot market will not be high. In the middle of the week, the billet and futures prices both increased, which significantly boosted market confidence. The domestic hot-rolled prices rebounded slightly. The overall mentality of traders was good, and there was a large number of operationally high positions. The transaction of low resources was fair and the high turnover was weak. Near the end of the week, the related period was mixed in red and green, and the market was watching and sentiment was strong. Some traders were willing to ship, and some markets in the session were lower.


    In the third week (4.16-4.20), the domestic hot-rolling market was consolidated, ranging from RMB 40-100/tonne. The opening of the market at the beginning of the week, the trend of related futures fluctuates, the spot market has a strong atmosphere of wait-and-see attitude, and the merchants' attitudes are cautious. Their operations are slightly divergent and are generally accompanied by shipments. The overall market activity is not high, and the downstream purchases are still cautious. The performance of resource transactions is general. In the middle of the week, as the futures and raw materials billets both strengthened, the market’s bullish atmosphere was obviously mobilized, and traders’ confidence was generally improved and the firm’s quotation was shipped. The number of telephone calls in the market has increased, the enthusiasm for getting goods from the downstream has increased, and the overall resources have increased. However, the main performance is in low-level resources, and high-level resource transactions are still unsatisfactory.


    In the near future, the terminal demand continues to be released, and the inventory is further digested. The overall hot rolling market in the country is not high as a whole, and the sales pressure of merchants is not high. Under the boost of low inventory, the business mentality is optimistic. Coupled with the introduction of the news that the central bank lowered the standard, the liquidity of the market funds was eased, and the futures market was in a better position. However, near the end of the month, it is not ruled out that the high market price will fall again. Taken together, I expect that the domestic hot-rolling market will be stronger in the next few days.