Steel prices fluctuated upward. Last week (July 15-19), the price of screw steel fluctuated, and the price in Shanghai fell 10 yuan / ton to 3980 yuan / ton. Last week, the price of hot coils rose, with Shanghai rising 30 yuan / ton to 3880 yuan / ton. Cold rolling prices rose last week, with Shanghai rising 30 yuan / ton to 4230 yuan / ton. Last week, the price of zinc plating was flat, while that in Shanghai was 4570 yuan / ton. Last week, the price of high-speed line fell, and the price in Shanghai dropped 10 yuan / ton to 4230 yuan / ton. Last week, the price of the medium board fell, and the price in Shanghai dropped 10 yuan / ton to 3920 yuan / ton.

The rise of social inventory accelerated. Last week, the social stock of steel increased by 321500 tons to 12.145 million tons, of which screw steel increased by 175600 tons to 5.9622 million tons, wire rod increased by 113600 tons to 1.5643 million tons, hot coil increased by 27800 tons to 2.4228 million tons, medium plate increased by 14300 tons to 1.0637 million tons, cold rolling decreased by 9800 tons to 1.132 million tons.

Raw material price of coking coal was flat, coke rose, ore rose. Last week, the price of the main coke and coal car in Hebei was flat at 1560 yuan / ton, while the price of the first-class metallurgical coke car in Shanxi rose by 100 yuan / ton to 1840 yuan / ton. Last week, the price of ore rose. The price of Proctor's 62% ore index rose by 0.95 USD / ton to 119.5 USD / ton. The price of Tangshan 66% iron concentrate rose by 25 yuan / ton to 960 yuan / ton. Last week, China's main port iron ore inventory rose 2.6858 million tons to 116.8209 million tons, and the average daily port evacuation volume rose 1.55 tons to 2.9185 million tons.

Steel supply and demand return to reality, steel prices continue to rise. On the supply side, environmental protection and production restriction will continue to improve steel prices. In response to the follow-up work of environmental protection and production restriction, the national development and Reform Commission said on the 16th that the relevant departments will carry out supervision and inspection on the elimination of backwardness and the elimination of excess capacity in the field of steel and coal in the third quarter to prevent the resurgence of retired capacity. On May 17, Changzhi City issued the notice on emergency measures to improve the ambient air quality of our city as soon as possible, implemented measures to stop production and limit production by 50% for steel enterprises that have not completed the transformation of ultra-low emission. On the same day, Linfen municipal Party committee held a special report meeting on "one city, three districts" regional restricted iron and steel and coking enterprises' stopping production and quitting work, which emphasized to pay close attention to the implementation, accelerate the promotion and remove the "black hat" of ecological environment pollution as soon as possible. The follow-up production restriction policy will continue to strengthen production restriction measures, which will help reduce inventory and shrink supply. Considering the approaching of the military parade in September, in order to ensure the "military parade blue", and the establishment of eight ecological and environmental protection supervision groups by the central government to carry out environmental protection supervision nationwide, the expectation of environmental protection and production restriction will be further strengthened, and the steel supply may have a downward trend. In addition, the price of coke and ore rose last week and kept high continuously. On August 19, the price of scrap steel in the South suddenly soared, and the basic price of scrap steel in Quzhou Yuanli was increased by 60 yuan, and the purchase price of scrap steel in Xingcheng, Jiangyin was increased by 60 yuan / ton since January 19. High raw material price operation is expected to compress steel supply. Steady growth in demand. From the perspective of seasonal demand, July and August are the off-season of steel demand. The traditional Meiyu season suppresses steel demand, passive accumulation of social inventory, and reduces the profit space of steel enterprises. In late August, demand will pick up steadily. From the perspective of steel demand composition, real estate end and real estate trust are tightened but the demand is still resilient, and investment lag effect brings stable real estate demand contribution in the short term; infrastructure demand has rebounded. As of August 18, the scale of special debt approved by the development and Reform Commission has reached nearly 40 billion yuan, which will drive the acceleration of infrastructure projects in the second half of the year. On June 19, Chongqing will issue a batch of 34.870 billion yuan of local government bonds. According to this calculation, last week, the issuance scale of local bonds will reach 117.664 billion yuan, which is more than 100 billion yuan. At the same time, the total investment of Sichuan Expressway Construction Project is nearly 200 billion yuan, boosting the steel demand. For the manufacturing industry, according to the PMI data of manufacturing industry published today in June, although it is still below the boom critical point, However, it has stopped falling and stabilized, and the sub data has improved. It is expected that the manufacturing PMI will stabilize and recover in July and August. There is rebound space for steel procurement demand, and the inflection point needs to be further observed. From the perspective of Sino-U.S. trade war, the latest progress of Sino-U.S. economic and trade consultation occurred on 19th: the leaders of both sides discussed the implementation of the consensus of the two heads of state at Osaka meeting once again. The easing of trade war will benefit steel demand. On the whole, further implementation of environmental protection and production restriction, continuous implementation of environmental protection supervision and pressure on raw material cost may alleviate the pressure on steel inventory, compress steel supply and improve the profits of steel enterprises; the overall pull of steel demand is weak, and it is expected to stabilize and increase in the future. Good trade and expansion of infrastructure demand indicate that there is a large rebound space in the future, and the steel price is expected to rise.

The central enterprise integration policy is promoted, which will benefit the profits of steel enterprises for a long time. On July 16, the Secretary General of SASAC said that the next step is to steadily promote the strategic integration of the central enterprise group, accelerate the integration of the homogenization business of the central enterprise, and the field of power and environmental protection will become the key direction. In the short term, the industrial cost of merger and reorganization of integrated enterprises increases. In the long term, merger and reorganization is conducive to the transformation and upgrading of the iron and steel industry, upgrading the industrial concentration, giving full play to the scale effect and improving the profitability.

Last week's key recommendation stocks and logic: last week, all regions increased efforts to strictly implement the policy of environmental protection and production restriction, punish enterprises that did not reduce production as required, and the effect of production restriction is expected to further strengthen in the future, promote the contraction of domestic steel production, and push up steel prices. Although the steel market demand is weak at present, the toughness is still there, and there is considerable room for growth in the future. In the short term, the trade war will be favorable and the central enterprise integration policy will support the steel enterprise profits. We can continue to pay attention to Zhenxiang flat steel, square steel, longitudinal shear coiling and hot-rolled flat steel products, and also pay attention to special steel related products.