Review the past the government's real estate policy stimulus, basically is to stimulate the real estate demand, thereby stimulating new construction, driven by steel demand. But this wave of stimulus pathway may be different.
First of all, the government introduced the main objective of this policy is to stimulate the real estate inventory. The current round of real estate to inventory will not result in a substantial increase in new construction area. 2015 sales of commercial property area is 12.85 million square meters, an increase of 6.5%, for sale area of 7.18 million square meters, you look at a simple estimate and sale area only enough sales for six or seven months, but actually otherwise. Also need to consider the annual new construction area, 2015 to 1 billion square meters, the difference between sales and the completion of the area for 285 million square meters, this part is the difference to the inventory part. So in order to calculate the difference between 285 million square meters of it for sale area of 718 million square meters, two and a half years to digest.
Secondly, from the investment, new construction data and industry transfer cycle, steel demand is still the real estate in 2016 brought down. From the point of view of the previous law, real estate sales better bring new construction area may increase to six months time, but up to now, real estate sales improved has been maintained for 8 months, new construction still no signs of improvement. According to estimates of the previous data, 2016 real estate investment may be decreased by 2%, new construction decline narrowed to 9%. The completion of an area of 6.2% decline, the construction area decreased by 5.3%, the main reason lies in the 2015 new construction area dropped 14% will influence 2016 construction area, the actual demand for steel should be reduced. Preliminary estimates, in 2015 the real estate steel fell 20 million 300 thousand to 22 million 900 thousand tons, in 2016 is expected to decline by 15 million 750 thousand to 17 million 440 thousand tons.
Postganglionic black futures strong gains, but behind the push logic is not real estate stimulus policies, but the result of the imbalance between supply and demand in the industry fundamentals. Since August 2015, steel prices continued to decline, with no apparent rebound, steel loss increased, resulting in some mills shut down collapse. The blast furnace operating rate to 73% - 74% dropped from more than 80% levels, and because of the Spring Festival, funding and other aspects, although the mills earnings recovery, but still maintained a relatively low level. At the same time, the rate remains low at 71% by steel production capacity about 1000000 tons per month lower than the same period last year. Due to supply side maintained for a long time at a low level, coupled with export orders better, resulting in domestic spot resources in the last year of the end of season trend still tight overall.
The demand side, we believe that the overall demand in 2016 compared to 2015 will be shrinking, but the total demand will still maintain a level of 7.8 tons, down 2.4%, a decline of less. In 2015 the average operating rate of blast furnace is 83.5%, is expected in 2016 80% - 82%, and the current operating rate is only 74%, which means that there is a big gap of supply. With the restoration of the supply side takes time, the prices of steel cycle or will not end so quickly, the spot price is strong in the pattern may be maintained at 4 - May.
For the black variety of view, the writer thinks that the relative strength of iron ore, the main driving factor has three: a steel plant is to resume production, blast furnace operating rate increased from 74% to more than 80%, which means will be a marked increase in the demand for iron ore; second is the supply side in the first quarter will remain at a low level; the third is the current premium is still high, compared to the Platts index, iron ore futures premium of nearly $5, taking into account the main iron ore contract delivery period the price difference will return. Therefore, the iron ore futures in the current location of the price there are still large room for growth. Screw thread steel short-term can still maintain the uptrend, but later with the increase of steel production, coupled with the demand side is scheduled to release, there are still uncertainties, therefore the trend will relatively weak.
Overall, the late steel is still the possibility of a new high, and to maintain a strong 4 - May. But the price of steel of not strong demand side to promote more is caused by shrinking the supply end. The author believes that this stage of the supply and demand imbalance will remain for a long time, has also decided the thread steel of this wave of rising in the market cycle is only a rebound.