After the domestic construction steel market rose sharply in late June, the price of threads rose again and exceeded 4000 yuan/ton, while in early July, the market fell sharply and the price returned to about 3900 yuan/ton. This round of price decline, on the one hand, is the sharp contraction of raw material iron ore prices, dragging down the market for finished products; on the other hand, under the influence of Meiyu season in East China and floods in Central China, construction sites stagnate, terminal procurement slows down, and TRADERS'shipments are not smooth, resulting in a weakening demand-oriented decline. As of July 10, the average price of grade 16 threaded steel in Jiangsu, Zhejiang and Shanghai markets was 3913 yuan/ton, and that of Grade 8 high-speed steel in Jiangsu, Zhejiang and Shanghai markets was 4156.67 yuan/ton, which was 2.39% and 1.73% lower than that of early July, respectively. The price range of the mainstream first-line factory was 3980-4020 yuan/ton, and that of the second-third-line factory was 3820 yuan/ton. The price gap was further narrowed. 。

Raw Material: The price of domestic imported iron ore market showed a concussive upward trend in early July. The rise contracted sharply compared with the previous two months, and the overall price fluctuation range was larger, but the price level remained high, and the profits of steel mills continued to shrink. As of July 10, the average price of vehicle panels in 62% of the PB powder mine ports in Australia was 904.56 yuan/wet ton, up 4.07% from the beginning of the month. Compared with the weakness of the finished product market, the overall price of the imported ore market continues to be strong. On the one hand, the port inventory has reached a new low level since 2017 (11.493.15 million tons of inventory, down for 9 weeks); on the other hand, the mine traders smoothly deliver, continue to cash in, stabilize the spot market price, and strive for the maximum price gap. However, due to the continuing production restriction in Tangshan and the shrinking profits of steel mills, the spot demand for ores will decrease in the short term; in addition, the weak futures prices drag on, it is expected that the space for spot increase will be greatly reduced, and the future or large probability of market callback will lead to the decline of finished products.

Supply side: As of July 5, the opening rate of 137 threaded steel mills in China was 79.02%, the ring-to-ring ratio increased by 0.33% and 6.22% year-on-year. The weekly output was 3776,600 tons, the ring-to-ring ratio increased by 1.20% and 21.85% year-on-year. The opening rate of 92 wire rod mills in China was 75.74%, the ring-to-ring ratio was flat and increased by 1.14% year-on-year, and the weekly output was 1659,000 tons and the ring-to-year-on-year. It increased by 1.99% and 14.58% year on year. The data show that the production of construction steel plants is relatively stable, the market supply is on schedule, there is no obvious cut-off phenomenon, the price of a small drag on the market.

Inventory: As of July 11, the inventory of threaded steel mills was 2.273 million tons, the circumferential ratio increased by 98,000 tons, the social inventory was 5.786 million tons, the circumferential ratio increased by 39,400 tons; the inventory of wire rod mills was 617,000 tons, the circumferential ratio increased by 52,700 tons, the social inventory was 1.457 million tons, and the circumferential ratio increased by 81,400 tons. In the off-season market, the market de-inventory continues to weaken, inventory gradually accumulated, and also in line with the market's expectations for the post-evaluation of the current production policy, is not a pure short, showing a neutral. In addition, traders deliver half of the goods, and direct resources are still available. The rebound of overall inventory exerts a weak downward pressure on the price market.

Demand: According to the PMI of iron and steel industry surveyed and released by the China Federation of Independent States (UCSI) Steel Logistics Professional Committee, it was 48.2% in June, down 1.8 percentage points from May. In the sub-index, the inventory index of new orders and finished products increased, while the index of production, new export orders, purchasing volume and raw materials inventory decreased. PMI shows that demand at home and abroad continues to shrink, production willingness of enterprises has weakened, purchasing volume and raw material inventory have declined, the off-season characteristics of the steel market appear, which forms a greater pressure on steel prices.

Futures: The main contract of threaded steel began to rise 10 times in mid-June, followed by four consecutive declines. It has been shaking for the fourth day and breaking through the 4030 pressure line again. And from the 11-day position, opening position continues to increase, but the multi-empty game is fierce, and intra-day fluctuations oscillate upward. According to the Business Association Base Difference Map, the baseline difference of the thread on July 10 is -104, and from 2019-04-12 to 2019-07-10, the maximum baseline difference of the main thread steel is 336.00, the minimum value is - 116.00, and the average value is 135.35, so the baseline difference is expected to increase in the future. Therefore, short-term futures are expected to have room for decline and little room for rise.

To sum up, the analysts of thread steel in business associations believe that the price of construction steel is still strong, and the fundamentals are in the state of "supply slightly exceeds demand". At the present time, we should pay attention to the impact of supply reduction brought by environmental production restriction; and the cost support of iron ore for products and the slowdown of market turnover after fermentation of off-season demand effect. On the other hand, the price of Shagang was flat in mid-July, and the main steel mills'ex-factory price or steady follow-up showed that the steel mills were short-term hollow for the future market; however, investment in infrastructure in the second half of the year or should be started, demand will continue to stabilize and improve; high ore prices will also support the overall steel price level. Therefore, it is expected that the upward trend will continue to oscillate in the short term, and the market mentality and futures trend will continue to affect the spot price trend. It is expected that the spot price of threads will fluctuate in the range of 3900-4050 yuan/ton in July and the futures price will fluctuate in the range of 3930-4080 yuan/ton.