[brief comment on SMM Hot Volume] how to operate the self-protection of the steel mill on the tip of the tuyere wave?

Since the beginning of this week, the decline in spot prices in the mainstream market has widened, and the overall market is pessimistic. At the forefront of the storm, steel mills took the lead in taking orders at reduced prices to transfer risks. However, from a single point of view, the price reduction of steel mills has not played a role in stimulating the mood of terminal procurement. Therefore, under the pressure of continued weak rigid demand, steel mills are still bearish in the short term. However, due to the recent increase in environmental protection and production restrictions in the northern region, and some steel mills stop production and maintenance, so the subsequent hot rolling output may be reduced. In addition, the current raw material end iron ore price is strong, and the market price is almost close to the steel mill cost line, so it is expected that the spot price decline space is limited, high probability low shock.

Steel plant inventory: at present, the inventory situation of most steel mills in various regions is basically stable, and there is no pressure on spot prices as a whole. Individual steel mills due to the new hot rolling plan, resulting in hot rolling inventory slightly pressure, but into July maintenance efforts may be expanded, so the overall inventory is still not under great pressure.

Steel mill ex-factory price: at present, most steel mills issued a price policy in July, hot rolling and other products reduced by 50 to 100 yuan / ton. In addition, individual steel mills also take the way of increasing recovery to adjust the order price in order to boost the mood of traders. However, some bidding steel mills reported that the order situation in July still did not improve significantly.

Steel mill orders: most steel mills feedback June steel mill orders are basically stable, but July bid steel mill feedback, July orders are not optimistic, with the exception of long-term agreement, other resources and new resources orders are poor. And steel mills in order to cope with this situation, or even stop production and maintenance.

The specific feedback of some steel mills is as follows.

A Steel works (Northeast): the current inventory is in a normal state (3 to 5 days of turnover inventory is normally available), which does not cause pressure. June booking situation is not optimistic, orders are very few, and the specific production model is more confused, so it is planned to carry out some short-term maintenance in July, August / September may increase the intensity of maintenance, but the specific time depends on the receipt of orders.

B Steel Plant (North China): at present, it has an inventory level of 2 to 3 months, which belongs to the normal inventory state. The receipt of orders in June was slightly weaker, and in order to boost the mood of traders, increased settlement catch-up. The ex-factory price in July has been issued but has no practical significance, and will be adjusted according to the market conditions in the later stage. Steel mills believe that the current market spot price has been in a lower position, almost close to the steel mill cost price (about 3700), so although the terminal demand from June to July is still not optimistic, but by the raw material price support and government policy regulation, it is expected that the hot coil spot price space is not large.

C Steel Plant (Central China): at present, the pressure of the factory warehouse is not great (the specific data are not statistically available). June order situation is more normal, mainly long association resources, in July due to the plan to continue to reduce cooling and heat transfer, so the order for new hot rolling resources caused pressure. Current feedback on orders weakened slightly in July.

D Steel works (North China): at present, due to the renewal of the production and marketing system of steel mills, the order resources are slow to leave the warehouse, causing certain pressure on the hot rolling inventory (conventional inventory is 2.3-25000 tons, and the current inventory is about 30, 000 tons). June steel mill orders overall decline, among them, pickling, cold plate, galvanizing decline is more obvious, hot coil can still be maintained. In July, there was no preparation to lower the ex-factory price of hot rolling, and the post-settlement model was still adopted. Steel mills, the current spot market demand, more pessimistic attitude, it is expected that the late spot prices still have room to fall.

E Steel Plant (Northeast): the current inventory situation is relatively stable (standing current inventory of about 200000 tons, no specific data by variety). Orders fell in June and factory prices are not yet available in July (typically on the 25th). Steel mills are not very optimistic about the current market, that the current market rigid demand is weak, policy regulation can only start from the supply side, but if there is no large-scale maintenance and shutdown, there is still room for decline in the short term. [SMM Steel]