The total national stock of threads this week was 18.5483 million tons, a month-on-month increase of-5 percent, an increase of 93.7 percent over the same period last year. The vast majority of markets across the country have basically resumed operation, and the month-on-month increase in inventory growth continued to expand by 0.1 percentage points on the way to the continued recovery of terminal demand. But year-on-year inventory growth is still expanding.
Table 1: thread inventory
Source: SMM
Table 2: comparison of thread inventory prices from 2018 to 2020
Note: due to the epidemic factors since 2020, due to the different opening time of the market, there is a certain error in the actual average spot price.
Source: SMM
Specifically:
Social inventory 12.7441 million tons, down 533800 tons (- 4 per cent) from the previous month, + 68.7 per cent from the same period last year
Affected by the epidemic, terminal demand was delayed, the first half of the month basically stagnated, the recent sustained recovery, has recovered more than 60%, inventory can continue to digest.
But factory depots and supply-side increments continued to shift to social libraries, boosting year-on-year growth by 4.3 percentage points this week.
Fig. 1: a list of the trend of thread social bank from 2016 to the present
Source: SMM
The inventory in the plant is 5.8042 million tons, 437500 tons lower than the previous month, and-7.0 percent lower than the previous month. Year on year + 186.8%
According to SMM research, as of March 31, the operating rate of the electric arc furnace steel plant was 48.64%, an increase of nearly 30% over the middle and late March. The sharp increase in the operating rate of the electric furnace plant and the supply increment caused by the hot metal turning thread in the blast furnace plant are the main factors leading to the slowdown of inventory growth in the plant this week.
Figure 2: trend of Thread Factory Library from 2016 to present
Source: SMM
In the later stage, the current inventory is high, nearly double that of last year, and the supply increment of steel mills is already on the way. The recovery rate of demand may not shake the heavy pressure on the supply side in the short term, let alone the "internal worries" have not yet been alleviated. "external problems"-billet imports are likely to hit again. The downside risk of spot prices has not dissipated.
