According to SMM Iron and Steel, the total inventory of hot-rolled coils this week was 4.55 million tons,-4.60% month-on-month and + 49.72% year-on-year. Since the middle of March, the inventory of hot rolled coil in China has been declining continuously for seven weeks, which has gradually alleviated the pressure on hot rolling fundamentals and supported the spot price.

Table 1: hot rolling inventory comparison

Source: SMM Steel

Social inventory: this week hot rolled social bank 3.3456 million tons, month-on-month-5.01%, year-on-year + 59.82%;

Figure 1: social inventory trend chart

Source: SMM Steel

Steel mill inventory: this week hot rolling mill warehouse 1.2044 million tons, month-on-month-3.45%, year-on-year + 27.35%;

Figure 2: inventory trend chart of steel mill

Source: SMM Steel

According to SMM analysis, the factory social library continued to decline this week is still mainly supported by machinery, pipe plants and other terminal demand. However, it is worth noting that the rate of decline in the social treasury of the factory has narrowed compared with the previous period. Among them, the decline of the social library narrowed, can reflect the actual terminal replenishment demand is not strong, in the high inventory suppression, terminal procurement wait-and-see mood is strong. Factory warehouse decline narrowed, mainly affected by the weakening enthusiasm of traders to take goods, the north and the south almost unified prices, steel mill resources south blocked, coupled with the limited room for demand recovery in the north, resulting in a narrowing of the factory warehouse this week.

In addition, resource shipments continue in May Day, while terminal procurement is suspended and market arrivals are expected to accumulate slightly, so the probability of inventory decline after the festival continues to narrow.