[SMM Steel Market Morning News] Supply decreased, total inventory of building materials continued to decline this week

★Macro★

01 ★★★[MOFCOM Responds to US Hiking Steel and Aluminum Tariffs: Urges US to Stop Overgeneralizing and Abusing National Security Concept]

The Ministry of Commerce (MOFCOM) held a regular press conference, where a spokesperson introduced the recent key work in the commerce sector. A reporter asked, "The US has raised tariffs on imported steel, aluminum, and their derivatives from 25% to 50%, and the policy officially took effect on the 4th. What are MOFCOM's comments?"

He Yongqian, the spokesperson for MOFCOM, stated that China has repeatedly emphasized that the Section 232 tariffs are a typical act of unilateralism and protectionism, which have long been ruled by the WTO dispute settlement mechanism as violating WTO rules. This time, the US has once again raised tariffs on steel, aluminum, and their derivative products, which not only harms others and itself, does not help maintain industrial security, but will also seriously disrupt the stability of the global industrial and supply chains. The US approach has been opposed by multiple countries. China urges the US to respect economic laws, abandon the zero-sum mentality, stop overgeneralizing and abusing the national security concept, work with all parties to maintain a rules-based multilateral trading system, resolve respective concerns through equal dialogue, and jointly maintain the stability of the global industrial and supply chains.

02 ★★★[People's Bank of China Conducts 1,000 Billion Yuan in Outright Reverse Repo Operations]

On June 6, the People's Bank of China (PBOC) will conduct 1,000 billion yuan in outright reverse repo operations through fixed-quantity, interest-rate bidding, and multiple-price award methods, with a term of 3 months (91 days).

★Industry and Downstream★

01 ★★★ [[SMM Construction Material Inventory] Supply Declines, Total Construction Material Inventory Continues to Fall This Week]

The total inventory of construction steel continued to decline this week, with rebar inventory decreasing by 1.82% WoW and wire rod inventory increasing by 0.68% WoW. On the supply side, the operating rates of both BF and EAF steel mills declined this week. Currently, steel mills in Shaanxi have halted production for maintenance due to declining profitability, leading to a reduction in pig iron production. The production situation of EAF steel mills is divergent. One EAF mill in east China has resumed production, while in southwest China, due to electricity subsidies, market profitability has recovered, and some EAF mills have increased their operating hours. In south China, due to rainy weather and difficulties in collecting steel scrap, overall profitability is poor, and some EAF mills with severe losses have halted production for maintenance. On the demand side, affected by high temperatures in the north and rainy weather in the south, the downstream procurement progress has slowed down. In addition, data on real estate investment and new construction starts continue to decline, while infrastructure investment remains stable but not strong.

02 ★★★ [SMM Ningbo HRC Inventory] Ningbo HRC Inventory at 283,600 mt This Week

The large-sample inventory of HRC in Ningbo was 283,600 mt this week, a decrease of 14,500 mt WoW, or 4.86%, and a YoY decline of 31.66%.

03★★★ [Preliminary statistics show that nationwide retail sales of passenger vehicles in May reached 1.93 million units, up 13% YoY]

From May 1 to 31, nationwide retail sales of passenger vehicles reached 1.93 million units, up 13% YoY compared to May last year and up 10% MoM. Cumulative retail sales since the beginning of the year reached 8.802 million units, up 9% YoY. From May 1 to 31, nationwide wholesale shipments of passenger vehicles by producers reached 2.329 million units, up 14% YoY compared to May last year and up 6% MoM. Cumulative wholesale shipments since the beginning of the year reached 10.797 million units, up 12% YoY. From May 1 to 31, nationwide retail sales of new energy passenger vehicles reached 1.056 million units, up 30% YoY compared to May last year and up 14% MoM. The retail penetration rate of the nationwide new energy vehicle market was 53.5%. Cumulative retail sales since the beginning of the year reached 4.38 million units, up 34% YoY.

04★★★ [SMM Weekly HRC Balance] Dragon Boat Festival holiday combined with price declines led to a slight inventory buildup of HRC this week

This week, SMM statistics showed that the social inventory of HRC in 86 warehouses (large sample) nationwide was 3.0473 million mt, up 15,300 mt MoM, or +0.5% MoM, and down 24.84% compared to the same period in the new calendar year YoY. This week, nationwide social inventory saw a slight buildup. By region, the east China, central China, and north China markets continued destocking, while the south China and north-east China markets continued inventory buildup, with a significant expansion in the buildup rate in the north-east region.

05★★★ [Short-term "suspension of applications" for home appliance subsidies in multiple regions, mostly due to activity upgrades or policy research and formulation for the next phase]

Recently, there have been instances of suspended applications for national subsidies for trade-in of home appliances in multiple regions. On the JD.com platform, the national subsidy page for Chongqing home appliances displays, "Activity upgrade in progress. During the upgrade, you will be unable to claim or use national subsidy discounts." National subsidies for smart home appliances in Hubei are also temporarily unavailable due to activity upgrades. The national subsidy activity in Gansu is currently limited to users with delivery addresses in Lanzhou City, with activities in other regions under urgent preparation.

★Other Hot Topics★

⭕In the first four months, Hubei's transportation investment reached 65.91 billion yuan, accounting for 32.96% of the annual target, up 6.4% YoY. The total investment volume ranked third nationwide and first in central China.

⭕Xinjiang Kunyu Iron and Steel Co., Ltd. will establish a new 1.5 million mt 850mm hot-rolled strip production line to replace the existing 800,000 mt wire rod production line, with official operation scheduled for mid-June.

⭕Upon approval by the State Council, China South Industries Group Corporation will implement a split. Changan Automobile announced that its indirect controlling shareholder will be changed to a central state-owned enterprise split off for automotive business, with no change in the actual controller.

⭕On June 4, the Baltic Dry Index rose by 59 points, or 4.1%, to 1,489 points, reaching its highest level since April 4 and recording gains for six consecutive trading days.

⭕On June 5, Hao Ruifeng, Director of the Market Supervision Department of the National Energy Administration, stated that based on the current situation, it is expected that during the peak electricity consumption period this summer, the overall national electricity supply will be generally secured, but there may be tight electricity supply in some local areas during peak periods.