Steel rebound honeymoon period has ended, high iron ore inventories, bleak prospects

In the past three weeks, the domestic bulk commodity market has continued to plummet, and the black sector led the decline.
Products such as coking coal, coke, steel, and iron ore have set new lows in 2017 across the board in the past three trading days
.
For black products, the mid-line prospects have "malfunctions", and the trend may be differentiated
.
? Retail meat cutting institutions are looking for opportunities to sell short? Iron ore became the leader in the plummet from March to May this year.
The main iron ore contract of the Dalian Futures Exchange fell from its high in mid-March to this Monday by a range of 35.
6%; the main rebar futures contract has fallen by just 20% since the high point in mid-March; the coking coal has fallen even better from the high point above 1,900 yuan/ton at the end of March, at 21.
4%.
? Guangzhou Daily reporter survey In the Guangzhou and Shenzhen markets, it was found that there are currently very few retail investors who insist on "going long".
At the end of April, most retail investors still believed that black products had a "after-play"
.
Nowadays, some retail investors have "cut meat" out, and some retail investors have begun to "short"
.
Statistics from a futures brokerage platform in Shenzhen show that the holdings of mainstream institutions and corporate investors that invest in black products have also fallen by 30% from the same period in April.
Holding currencies and waiting for opportunities to short has become the current attitude of these investors.

.
The Guangzhou Daily reporter learned that there are three main reasons for the recent price drop of black products
.
First, the demand in the off-season is less than in previous years
.
It is still in the traditional off-season from March to May.
In addition to the helical inventory of building materials, the digestion of sheet materials is not satisfactory, and the pressure of short-term destocking is greater
.
Second, iron ore inventories are at historically high levels
.
As of the end of April, iron ore stocks in major ports reached 131.
95 million tons
.
Third, the pressure of technical callbacks is high, and the willingness of institutions to "short" is greater than the willingness to "long"
.
Since 2016 to February 2017, the black sector has soared for 20 consecutive months, and the cumulative increase of most black varieties has exceeded 50%.
Profits have become the choice of many institutions.

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? The steel rebound honeymoon period is over? The later stage of investment is more "short" thinking? From a technical point of view, the trend of this round of bulk commodities has not stopped so far.
Although individual varieties have shown signs of bottoming, the overall situation is still unknown.
Time is the bottom
.
Professionals remind investors to "buy dips" cautiously
.
? Zhang Sheng of Huatai Futures (Guangzhou) believes that the market outlook for commodities is more likely to be differentiated, and the black product sector itself will be differentiated
.
The outlook for the leading decliner iron ore is the most pessimistic, because iron ore is an international product and has the least influence due to the structural reforms on the domestic supply side.
High global inventories will restrict its rebound; rebar will last as long as one and a half years.
The "honeymoon period" is limited to May this year and has ended.
The increased regulation of the property market will offset the positive promotion brought by the supply-side structural reforms.
It is inclined to mid-line low consolidation.
It is recommended that investors turn to bearish thinking; prospects prefer As coking coal and coke products, they may be the first to rebound after the sharp drop.
Investors may wish to buy bottoms on dips
.