SMM7 March 23:
As of July 23, the national total inventory of building materials was 10.9298 million tons, with a month-on-month ratio of + 1.8% and + 28.1% compared with the same period last year. This year's precipitation seems to be more violent than in previous years, spread more widely, in the past half a month, almost all the areas along the Yangtze River have fallen, and the release of demand has been greatly restricted, so that the current thread inventory is still accumulating.
Table 1: Overview of thread inventory
Source: SMM
Table 2: comparison of Thread inventory prices from 2018 to 2020
Source: SMM
Specifically:
The inventory in the plant is 3.3504 million tons, an increase of 112400 tons this week, + 3.5% month-on-month, and + 38.3% year-on-year.
Under the heavy precipitation, the water level in the Yangtze River basin rises and floods are issued in many places. The two-way transportation of raw materials and finished products in steel mills is limited. As the steel mills maintain a certain inventory of raw materials, the vast majority of steel mills can still maintain the normal production state, but the transfer efficiency from the factory warehouse to the social warehouse has declined rapidly, resulting in a 6.8% faster growth rate than last week.
Figure 1: an overview of the trend of thread factory warehouse from 2016 to now
Source: SMM
Social inventory is 7.5974 million tons, an increase of 95300 tons this week, + 1.3% month-on-month and + 24.3% year-on-year.
The pace of social storage has slowed significantly this week. On the one hand, the transfer from factory warehouse to social warehouse is hindered. On the other hand, from a national point of view, the demand side is gradually improving-while the demand in East China is delayed and difficult to release smoothly due to the interference of rain and flood disasters, the release of demand in the whole northern region is relatively stable, while in South China, after the rain has faded, the demand can be replenished, and the situation of shipments is significantly better than in the previous period.
Figure 2: an overview of the trend of Thread Community Library since 2016
Source: SMM
Table 3: July 23 to 8. A list of the weather conditions in the mainstream cities on the 10th of June
As far as the later stage is concerned, although the off-season is not far away, there are signs of weakening compared with the earlier period. After the water level falls and the flood fades, the market will return to normal again-the transfer rate from factory storage to social storage will be accelerated, and the overall accumulation will continue, but the accumulation rate will slow down slightly when the demand improves. The spot market has gradually entered the stage of getting rid of inventory as the main task, while spot prices have maintained a difficult upward state under the recovery of demand, the support of strong costs and the suppression of high inventories.
