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[SMM Hot Volume] short-term inventory reduction is difficult to stop supply growth and subsequent regional inventory may be differentiated.
Oct 31,2019 17:17CST
The content below was translated by Tencent automatically for reference.

The total national stock of hot rolling this week was 2.9933 million tons, a month-on-month ratio of-2.6% and a year earlier of-10.9%. Although the overall still continues to fall, driving the fundamental pressure to ease. However, it is worth noting that the rate of decline has narrowed compared with last week. If the environmental protection production line is not as strong as expected, the overall inventory may have a tendency to accumulate under the circumstances of the increase in new production capacity of steel mills, the entry of foreign imported resources into the market, and the relative decline in demand in the north. At the same time, it is expected that there may be differentiation in the degree of regional accumulation. Among them,


Social inventory: 2.0837 million tons this week, month-on-month-4.1%, year-on-year-14.5%. The social library still continues to descend the database state, but the speed of lowering the library has slowed down. The continuation of the decline this week is mainly due to the persistence of rigid demand, and in recent days, when the rebound in futures volumes has boosted market sentiment and spot prices have been relatively stable, overall transaction recovery has led to a decline in the social base. However, the main reason for the slowdown is that under the influence of the Wuxi viaduct incident in the past few weeks, traffic control in most areas has been tightened, and the speed of spot storage in ports has dropped sharply. After a few weeks of adjustment, the pace of storage of resources has recovered slightly, and the total amount of storage has increased compared with the previous two weeks, which has led to a narrowing of the rate of decline this week.


Steel mill inventory: 909600 tons this week, month-on-month + 1.0%, year-on-year-1.2%. The decline and increase of the factory reservoir is mainly due to the resumption of production at the end of the maintenance of some steel mills and the weak receipt of orders by the lock price steel mills. According to SMM research statistics, Angang, WISCO, Angang and other steel mills this week hot rolling line maintenance basically completed at the beginning of this week, the average daily output is about 35000 tons. At the same time, the steel mill resource shipment maintained a stable pace in the early stage, so in the case of the increase in production, the steel mill inventory has accumulated. In addition, the current market pessimism is pervasive, traders have a strong willingness to reduce the warehouse, coupled with continued losses, so the lock price steel mills book fewer resources. In addition, most of the terminals are mainly purchased on demand, so the overall result is that the lock price steel factory receives the order weakly and the steel factory inventory increases.


In addition, it is worth noting that although the pace of storage of resources has slightly recovered this week, the transport of one car, one roll mode still can not keep up with the unloading speed of incoming resources, resulting in the port backlog of resources is still too much, the actual social library pressure is greater than the data feedback. In addition, Shenglong Metallurgical new 1780mm hot rolling line has now been put into production, the follow-up new production will increase one after another, and mainly put in South China, superimposed foreign import resources will soon enter the market (this part of the resources invested in the South China market) and the northern resources continue to go south, then the inventory pressure in the follow-up South China market may further increase, when the South China spot price will continue to fall in the case of the intensification of the contradiction between supply and demand.

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