Recap #
This week RB2610 fell through 3080 and reached a four-month low at 3057, so if I had traded as planned, I would have lost 1% of my capital. To be honest, I could not explain the price decline in terms of the fundamentals. It was probably due to the price decline of coke and weak expectations.
Observations #
Compared to last week, the price of rebar looks more attractive, and I didn’t see the fundamentals turn significantly worse.
Basis #
On Friday, the basis fell even further compared with last week. This provides a better margin of safety.
Profit Margin and Inventory #
Last week, there was a moderate fall in the profit margin of coking, while there was no significant change in the profit margin of rebar. There was no significant change in the inventory of coke and rebar either.
Further Comments #
East China has entered the plum rain season recently based on my observation in Shanghai, so construction activities have probably slowed down. The demand for rebar may be affected. This is one of the risks I must consider.
Plan #
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