Address: No. 20 Yongjiongjiao, Xicheng District, Yingkou City, Liaoning Province
The fundamentals of the stainless steel valve market have improved. The performance of commodity futures represented by iron ore and stainless steel in March was quite eye-catching, with a large inflow of funds, and all of them broke the single-day transaction history record. For the inflow of a large amount of funds in the futures market, due to the relatively loose credit at the beginning of the year, the stainless steel market has abundant liquidity. Previously, the market diverged in the later stages of the stock market, leading to the outflow of funds to the commodity market; and the price of commodities in the international market has generally risen since the beginning of the year. The market is bullish and the sentiment is high, and funds are more favored for black goods in price depression.
However, from the perspective of the futures market transactions alone, the black varieties of the futures market have shown signs of excessive speculation, and we should be alert to the accumulation of market risks. Prior to that, the ratio of stainless futures trading volume to open interest was mostly less than twice. During the same period, some other black futures varieties also exhibited similar characteristics.
Generally speaking, the transaction position ratio refers to the ratio of the transaction volume to the position volume. The intraday trading is more active, and the transaction volume of industries such as stainless steel valves will be greater than the position volume. If the trading volume is less than the holdings, it means that the mainstream of funds in the market is long-term, which is a manifestation of a very rational and mature market. However, if the trading volume is several times the holding amount, it means that the intra-market fund transactions are frequent. It is reasonable to maintain a trading position ratio of 2-3 times. Excessive multiples indicate signs of excessive speculation.
The fundamentals of the stainless steel valve market have improved, but the supply and demand situation has not reversed. In the short term, market sentiment is more optimistic, and speculative funds have contributed to the rise in stainless steel prices and mineral prices.
The huge risk of price fluctuations makes it more difficult for stainless steel companies to manage risks, and distorted price signals may make management decisions wrong. If the subsequent data of the fundamentals cannot be falsified, there may be a deep adjustment in the soaring prices of black varieties in the futures market. In addition, the current market situation of oversupply and destocking of the stainless steel market still exists, and the continuity of the recovery is yet to be verified.
The rebound of the commodity market in this round is based on the expected increase in the spring consumer season and the expected superposition of supply-side reforms on the market. At the same time, the easing of currency liquidity in the first quarter made the capital market ample, which created a monetary basis for this commodity rebound. However, neither currency nor production expectations can change the current situation of weak overall consumption. Therefore, the rebound of stainless steel prices must only be positioned as a rebound, and the conditions for the overall reversal are still insufficient.
With the rebound of stainless steel prices, the reduction of production due to loss of profits in the previous period will inevitably be resumed, and the utilization rate of capacity will increase. In the context of weak consumption, the phenomenon of imbalance between supply and demand will be difficult to change or even worsen.
In addition, industry insiders believe that supply-side reforms will improve the excess capacity of stainless steel valves and lay a new industrial foundation for the next round of economic growth. However, if excessive speculation occurs in the capital market, the continuous increase in stainless steel prices will make the supply and demand pattern deteriorate again.