[brief comment on SMM Hot Coil] Statistics of production schedule of mainstream Hot Coil Steel Plant in July 2019

According to the latest survey of SMM Iron and Steel, the total planned output of the mainstream steel mills in July 2019 is 9.5922 million tons, 0.73% higher than the actual output of 9.5231 million tons in June, 625000 tons in planned exports, 4.5% in April, and 8.9672 million tons in China, + 0.5% month-on-month.

The overall data show that the total hot rolling output has increased slightly this month, mainly due to,

(1) at present, the cold line products are almost in a state of negative profit, while the hot rolled products are still profitable (100 yuan / ton). In addition, the operation of the cold system heat transfer system is relatively simple, so on the basis of the conversion of some steel mills with more cold system products in the previous period, the operation of cooling and heat transfer has increased (from June to July, the cold and heat transfer output reached 300000 tons).

(2) the resumption of production in some maintenance steel mills in June led to an increase in hot rolling output (the total amount of maintenance and repair in some steel mills reached 268000 tons this month).

(3) in the early stage, due to the stimulation of Tangshan environmental protection and production restrictions and the news of the relaxation of Sino-US trade relations at the G20 summit, the spot prices rose sharply, so the profits of hot rolled steel mills rebounded, so the steel mills that were not affected by the production restrictions increased their enthusiasm for production and the hot rolling output increased.

However, it is worth noting that due to the impact of environmental protection and production restrictions, the planned output of steel mills in Tangshan has dropped significantly this month, so the increase in the resumption of production, the increase in cooling and heat transfer, and the increment of hot rolling mills in other areas that are not subject to environmental protection, resulting in only a small increase in hot rolling output this month. At the same time, according to research feedback, Tangshan environmental protection production restrictions affect the total plate volume of about 1.29 million tons, and the hot rolling steel mill production statistics only include a small number of Tangshan steel mills, so on the whole, there is no need to be too pessimistic about the fundamentals of supply and demand. Spot prices are expected to rise in the later period.

In the northern region, the planned commodity volume of hot rolled coil is 4.733 million tons, month-on-month ratio-5%, and the planned export volume is 215000 tons, month-on-month ratio-7000 tons.

The planned commodity volume of hot-rolled coil in East China is 3.139 million tons, which is 11% of that of the previous month, and the export plan is 336000 tons, which is + 34000 tons of the month-on-month ratio.

In central and southern China, the planned commodity volume of hot rolled coil is 1.29 million tons, month-on-month ratio is-2%, and the export is 40, 000 tons, the month-on-month ratio is the same.

The planned commodity volume of hot rolled coil in the western region is 430000 tons, with a month-to-month ratio of 6 per cent.