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Steel market's supply-over-demand conflict will become more pronounced in 2020

Views: 12     Author: Site Editor     Publish Time: 2020-12-25      Origin: Site

For how to carry out asset allocation, Wang Yang said, three quarters of local special bond issuance concentration period, infrastructure should be strong support. Commodity support is more certain, interests are also supported, but the event is more uncertain, positions should not be too high, bond positions can be less configured upfront, gradually increasing later. At the same time, he believes that due to the Federal Reserve cut interest rates, at the same time, all kinds of risky events around the world, as a safe-haven asset of gold can still be appropriately more allocated, and throughout the year. "From a correlation point of view, the correlation between equity and commodities is likely to be lower in the next phase, with more of both asset classes smoothing out gains up front and then gradually reducing the allocation. The overall process is one of dynamic adjustment, while also looking at changes in the trend of various events." In short, Wang suggested that for a healthy asset allocation, you can overweight gold and bonds; medium weight equity, commodities and crude oil; low weight real estate and wealth management products.

Zhang Qiusheng believes that the coke price in 2020 is relatively firm, but also look at environmental protection and de-capacity efforts. Under the strict environmental protection situation, coke production decreased slightly, steel mills under the high start of high quality coke demand increased, supply and demand showed a tight balance. At the same time, the coking de-capacity policy and efforts have been stepped up year by year, with ultra-low emissions and steel coking pushing capacity withdrawal and structural optimization. The mismatch between supply and demand is expected to be the core driver of coke strength. The coal market is expected to be balanced between supply and demand in 2020, with prices being mainly stable.

 

In terms of how to manage risk in the black industry chain in 2020, Cai Congzheng analyses that.

 

One is the risk of real estate investment declining due to the real estate market policy adjustment. Steel mills and steel traders with high inventories, can consider the appropriate basis for steel futures selling hedge. Rebar and hot coil futures can be sold as hedges based on the base spread. Secondly, facing the risk of coke price increase due to the reform of the supply side of the coking industry, the industry chain can buy futures and options to preserve the value of the main coke contract according to the base difference situation, and steel mills can purchase on demand and choose the opportunity to buy the main coke contract. Thirdly, the industry is facing the risk that supply exceeds demand, steel profits are squeezed. Industrial chain enterprises can reduce the spot inventory, pre-sell futures on their own steel production, reduce the purchase of spot raw fuel, virtual stock purchase of raw fuel futures, and choose far-month futures contracts for virtual steel mill lock-in operations.


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