Time and range of demand adjustment:Steel demand has been rising for more than a year after the epidemic, and recent statistics from both the Bureau of Statistics and onlookers show thatThe high point of this round of demand may have passed.We estimate that the growth rate of steel demand in May is 1.3% compared with the same period last year, which continues to slow down from 5.5% in April. Excluding external demand, the growth rate of domestic demand is estimated to be close to 0%. Steel couplet weekly steel table data also began to negative growth in late April, basically confirmed with the data of the Bureau of Statistics. Structurally, demand from the construction industry is even worse, reflected in the negative growth in cement production and excavator sales in May. Since the upstream time is more than one year, it should correspond to the corresponding level of adjustment time. However, the range of adjustment is more uncertain, and we try to find ideas from the historical data of excavator sales.

Demand adjustment and negative growth of excavators:Digging machine sales data is an interesting indicator, in the past 10 years, four rounds of economic cycle adjustment, digging machine sales will show negative growth, respectively, is 2011-2012, 2014-2015, 2018-2019 and this time.

The sales volume of excavators is consistent with the performance of real estate sales:Similarly, in each round of demand cycle adjustmentThe area of real estate sales will also show negative growth.The strength and duration of each negative growth of real estate is consistent with the sales performance of excavators. For example, in the two rounds of adjustment of 2011-2012 and 2014-2015, the negative growth time and range of digging machine is relatively larger, and so is the area of real estate sales; while in the adjustment of 2018-2019, the sales volume of digging machine only shows a negative growth of one month, and the correction of real estate sales is also relatively small. It may be the business correlation between the two causes the correlation of the data.

This round of steel demand adjustment may not be small:At present, in the early stage of the demand cycle adjustment, the domestic demand of iron and steel has been close to zero growth, and in the later stage, with the continuation of the cycle downward, the demand may fall into the negative growth range. The time point of negative growth of the excavator is of reference significance to the intensity of periodic adjustment:When negative growth occurs in the early stage of adjustment, the time of negative growth is often longer and the intensity of demand adjustment is greater, which is what happened in 2011-2012 and 2014-2015; on the contrary, the time of negative growth is even shorter and the intensity of demand adjustment is smaller, corresponding to the round of adjustment in 2018-2019.The negative growth of this round of excavator sales appears in the early stage of the cycle adjustment, which may indicate that the current round of demand adjustment is relatively larger.

In the later stage of the iron and steel plate, we mainly grasp the opportunity of phased rebound:Under the trend of slowing demand, the plate lacks a large-level market, so it can only seize the opportunity of the wave band, and the next time point of concern is on the eve of the China News. Although the market has expected high profits in the second quarter of iron and steel, some stocks may still exceed expectations. On the eve of the report, you can pay attention to the trading opportunities brought about by the second quarterly report of steel enterprises. the targets with greater flexibility include Maanshan Iron and Steel Co., Ltd., Benxi Steel Plate, Valin Steel, Chongqing Iron and Steel, Jiuquan Iron and Steel Hongxing, Xingang shares and so on.

Risk Tips:The dollar rose sharply; the macroeconomic downturn led to pressure on demand; the risk of inadequate implementation of steel production restrictions; the risk of a decline in steel exports.

This article is edited from Wall Street News, by Guo Hao and Cao Yun of Zhongtai Securities, and Xiong Jie, financial editor of Zhitong.