[brief comment on SMM Hot Volume] is it difficult to reverse the trend of inventory by limiting production next week?

On the treasury side: the total inventory of hot rolls nationwide this week was 3.1852 million tons, + 1.5 per cent compared with the previous week and + 2.9 per cent compared with the same period last week. This week, the factory warehouse and the social database increased at the same time, driving the general treasury to continue to rise. Among them,

Steel plant inventory: this week's hot rolling mill warehouse of 912800 tons, month-on-month ratio of + 0.8%, year-on-year-9.7%. Although the factory warehouse continues to increase, but the increase has a greater convergence. Mainly because,

1. Tangshan environmental protection production restrictions have been affected by the news that spot prices have risen sharply since the beginning of this week, so the production costs of steel mills have not fluctuated greatly (the current production raw materials are mainly purchased in May). Steel mill profits have increased compared with the previous period. Therefore, some steel mills, which are not affected by the production restriction, have a higher production enthusiasm driven by profits, and the impact of the current steel mill production restriction has not yet been reflected, resulting in a small increase in hot rolling output in the short term.

Second, some of the steel mills that have been overhauled have resumed production one after another in late June, which has also led to an increase in hot rolling output this week compared with last week. Cangzhou Iron and Steel Hot Coil Line maintenance and production on June 25, Thai Iron and Steel hot coil line maintenance and June 19 production, Shagang hot coil line maintenance and production on June 27th. )

Third, under the speculation of environmental protection and production restrictions this week, the futures market has risen sharply, leading to a small outbreak of speculative demand, so this week's steel mills have slightly better orders than last week, and shipments have increased month-on-month. Therefore, the increase in the factory warehouse has a greater convergence.

Social inventory: this week hot rolled social warehouse 2.2724 million tons, month-on-month ratio + 1.8%, year-on-year + 8.9%. It has increased for five weeks in a row, and this week's increase has been larger than last week. Mainly because, since June, the mainstream market has gradually entered the accumulation stage, coupled with the continued weak demand, the social inventory has gradually increased. In addition to the increase in the arrival of mainstream market resources this week, the additional investment of steel mills caused by active speculative trade has also increased compared with last week, so the increase in social inventories has been increased this week.

Therefore, on the whole, although the implementation of the current environmental protection and production restriction policy is relatively strict, it is still in the stage of news speculation, so the impact of production reduction in steel mills is difficult to reflect in the short term. In addition, under the influence of the arrival cycle, the resources of the long Association may arrive next week, so the overall inventory will be transferred from the factory warehouse to the social warehouse. [SMM Steel]