At present, the entire Sanitary Diaphragm Valve industry chain has entered the stage of risk hedging

At present, the upstream, midstream and downstream products of the domestic sanitary diaphragm valve industry have all been listed in futures products. The procurement and sales of the sanitary diaphragm valve industry can all use the futures market to avoid risks and lock in profits. It can be said that the entire sanitary diaphragm valve industry chain has entered the stage of risk hedging.

The operating conditions of many stainless steel plants have improved significantly since the Spring Festival. There are three main reasons:

First, the decapacity of the medium-frequency furnace has indeed had a practical impact;

Second, the sanitary diaphragm valve market has a good expectation for the peak season demand in the first half of the year, and the middlemen have taken the initiative to replenish inventory, thereby amplifying the market demand;

Third, the price of coke has continued to decline after the festival, giving up the profits of stainless steel plants. From the perspective of the whole year, the overall profit of stainless steel plants is expected to rise from the bottom this year.

In early December 2016, the sanitary diaphragm valve market hyped the shutdown of the medium-frequency furnace, but the profit of the medium-frequency furnace was high, and the output was still being released. Coupled with the weakening of quarterly demand, a wave of declines occurred, and many sanitary diaphragm valve companies had difficulty in sales. However, some private enterprises have suffered great losses due to their failure to avoid operating risks in the futures market.

The medium- and long-term terminal demand for sanitary diaphragm valves is positive, but in the short term, the probability of further improvement in demand is small; and the resumption of production of stainless steel plants will be quite rapid under the stimulation of high profits; the accumulated inventory of stainless steel welded pipe trade is also large, so the spot price of stainless steel welded pipes may be close to the top. The sharp rise in iron ore in the early stage has already reflected the distribution of most steelmaking profits. In the later period, accompanied by the stagflation of stainless steel welded pipe prices and the decline of steelmaking profits, coupled with the abundance of supply and inventory, the probability of iron ore falling back and then fluctuating is high.

As far as the entire black series is concerned, the terminal demand has obviously warmed up as expected, but the driving force for further improvement is also fading; stainless steel plants will resume production soon under the stimulation of high profits, and the sanitary diaphragm valve trade has accumulated a lot of inventory, so the overall upward momentum of black series futures may weaken, and the market will change from steel ore leading the rise to coal coke making up for the rise. As for how steelmaking profits are distributed between various raw materials and steel mills, based on the degree of supply monopoly and the existing raw material inventory levels, it should be iron ore > coking coal > coke.