Inventory:

The total national stock of hot rolling this week was 3.3031 million tons, a month-on-month ratio of-3.3% and a year-on-year rate of-4.6%. In the second week after the festival, inventories rose from last week's three increases to three declines, prompting some relief in fundamental pressure. Among them,

Social inventory: social bank 2.354 million tons this week, month-on-month-4.1%, year-on-year-3.7%. The decline in social treasury is mainly due to the decrease in the arrival of market resources and the low price of replenishment at the end of the market. According to SMM statistics, the arrival of mainstream market resources this week basically returned to the level of the long Association in the early days, and in addition, there are even some steel mills affected by environmental protection and production restrictions, the volume of resource shipments has been reduced. At the same time, although the overall demand is not as good as last week, but because of the strong pessimism in the market and the strong willingness of traders to reduce the stock at low prices, the transaction at low prices in the market can still be maintained, resulting in a decline in the social base as a whole.

Steel mill inventory: 949100 tons this week, month-on-month-1.1%, year-on-year-6.6%. The decline in the factory warehouse is mainly due to the re-emergence of environmental protection and production restrictions and the maintenance of steel mills, which have led to a reduction in the output of steel mills. Recently, Tangshan, Handan, Taiyuan and other places have issued news of environmental protection and production restrictions, tightening the control of steel enterprises again. According to SMM, some steel mills have implemented the stop and limit production requirements one after another, and in mid-October, the hot rolling production lines of Angang, WISCO and other hot rolling mills have been overhauled, so the hot rolling output of the steel mill has been reduced, so the factory warehouse has decreased under the condition of continuous shipment of previous orders.

On the spot side:

Although this week, driven by the decline in the warehouse, the fundamental pressure has eased, but in the follow-up new capacity production line continues to put into production and the environmental protection production limit news speculation numb situation, the market pessimism is still strong. Recently, due to traders panic selling, resulting in accelerated decline in spot prices, and is now at the lowest level after the year (according to the highest level after the year fell 400-550 yuan / ton).

To this market SMM believes that the current spot price basically returns to the supply and demand fundamentals, the news surface is difficult to have the big disturbance. Therefore, if the regional production restriction policies recently released can be strictly implemented, and the output of steel mills does decline substantially, the spot price is still expected to stabilize for a period of time, but if it still stays at the level of big thunder and small raindrops, then the overall spot price decline is difficult to change.