[SMM thread] inventory decline under heavy supply pressure, what is the inventory decline next week?

This week, the country's total inventory of building materials was 10.839 million tons,-8.9% compared with the previous month, accelerating by 0.2%, and + 38.9% compared with the same period in the Gregorian calendar last year.

The output of this period exceeded last year's peak, and the national inventory of building materials continued to be eliminated smoothly.

Table 1: Overview of 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 times in different places, there is a certain error in the actual spot average price; the time dimension is the Gregorian calendar date.

Source: SMM

Specifically:

The inventory in the plant was 2.997 million tons, down 391000 tons from the previous month, and 432100 tons last week, an increase of 0.2 percent, or + 46.5 percent from the same period last year.

The amount of inventory reduction this week is slightly less than that of last week. This week's output reached a new peak in recent years, after nearly a month of gradual increase, output is gradually approaching the peak, output growth restricts the speed of factory depots and depots. However, in terms of the average inventory reduction in the past four weeks, the current inventory still belongs to a relatively high decline. Recently, when the factory warehouse level is close to the same period last year, finished product prices have been pushed up, so in the case of collective price increases by steel mills, the bargaining power of the terminal to steel mills is weak, so steel factory shipments can still be maintained at the same level as the previous period. In addition, under the bullish expectation of the future, more traders took the goods to the bottom last Friday, which also contributed to the decline of the factory warehouse.

Figure 1: an overview of the trend of thread factory warehouse from 2016 to now

Source: SMM

Social inventories were 7.842 million tons, down 667100 tons from the previous month, and 701900 tons last week, an increase of 0.2 percent, or + 36.3 percent, compared with the same period last year.

The current period of social inventory reduction is less than the previous period, this week by steel mills actively push up prices, superimposed the market generally good expectations for the two sessions, spot prices rise too fast, leading to prudent terminal procurement, and steel mills docking terminals are different, most of the terminals that get goods from the market are not key projects, and are more sensitive to prices.

Figure 1: an overview of the trend of threaded community library since 2016

Source: SMM

Next week, SMM expects production stocks to fall, and building materials inventory to decline or accelerate. According to SMM research, with the initial improvement in downstream orders for industrial wire rod, the hot metal from industrial wire rod to building materials in the early stage of some steel mills began to return to rolling industrial wire rod, superimposed during the two sessions, blast furnace steel mills may have a certain reduction in production and emission reduction, in this case, if consumption is basically maintained at this week's level, the decline in building materials inventory may be expanded.