On the treasury side: the total inventory of hot rolls nationwide this week was 3.4031 million tons, + 1.6% from the previous week and + 6.3% from the same period last year. Total inventories continued to rise this week and fundamentals continued to weaken. Among them,

Steel plant inventory: this week's hot rolling mill warehouse of 995300 tons, month-on-month ratio of + 3.1%, compared with the same period last year-6.9%. The increase of plant warehouse is mainly due to the relaxation of the production limit of some long process steel mills after July 15 in Tangshan area, resulting in a slight increase in hot rolling output in Tangshan area (recovery of production leads to plate increment of 800 tons / day). Due to the limitation of production increment and road transportation, the number of steel mills in other areas has increased. Among them,

In terms of output, due to the continuous rise in iron ore prices and environmental protection to stimulate coking coal and coke to rise, resulting in the rise of hot rolling costs, so recently some steel mills hot rolling net profit gradually contracted, almost close to the edge of the cost line, so steel mills in order to apportion the total cost of hot rolling production, and increase hot rolling production efforts, increase hot rolling output, in order to achieve the purpose of small profits and quick sales.

In terms of transportation, the recent rainstorm weather has led to limited road transport (the current round of heavy rainfall swept Zhejiang, Jiangxi, Hunan, Guangxi, Chongqing, Sichuan, Guizhou and other provinces), affecting the normal shipment of steel mills.

Social inventory: hot rolled this week 2.4078 million tons, month-on-month ratio of + 1.0 per cent, year-on-year + 12.9 per cent. Due mainly to the fact that demand is still in the off-season and the arrival of resources continues to increase, the social database continued to increase this week in line with expectations.

However, it is worth noting that the growth of both factory and social libraries has slowed down. Among them,

The slowdown is mainly due to the fact that although the current hot rolling steel mills are more motivated to produce amortized costs, they are currently making a profit (the gross profit of the hot rolling steel mills is between 150 yuan and 200 yuan / ton, compared with about 1000 yuan / ton in the same period last year. Under the double pressure of environmental protection and production restriction, the increase of hot rolling output of steel mills is limited.

The slowdown in the growth of social databases is mainly due to the speculation of various news earlier this week (environmental restrictions continue to be strict, and macro data have improved beyond expectations), leading to a temporary rebound in market sentiment, stimulating a small release of wait-and-see demand in the early stages and digesting part of the social inventory.

In addition, in the context of Tangshan environmental protection and production restrictions, the reduction has not yet been reflected in the market, and it is expected that at the end of July and the beginning of August, the production reduction situation will be gradually reflected in the market, so the situation of the factory community may take a turn for the better in the later stage, and the spot price will be supported to a certain extent, so there is no need to be too pessimistic in the later stage. [SMM Steel]