According to SMM Steel on May 28th: this week, the total inventory of hot rolled coil is 3.8958 million tons, compared with-4.72%, which is + 30.38% compared with the same period last year. The expansion of the decline this week is mainly driven by the expansion of the factory warehouse, and the range of hot volume decline has increased steadily in recent weeks, and the overall terminal demand has performed well.

Table 1: comparison of hot rolling inventory

Source: SMM Steel

Social inventory: 2.8249 million tons of hot rolling stock this week, compared with-3.01%, + 36.6% compared with the same period last year. Recently, the spot price of hot volume has gone up and down, the terminal mentality is more cautious, and the purchase wait-and-see is given priority to, resulting in the actual inventory digestion situation is lower than expected. At the same time, the factory treasury continues to want to transfer the social treasury, increasing the pressure on the social treasury, which is also one of the reasons for narrowing the decline of the social treasury this week.

Figure 1: social inventory trend chart

Source: SMM Steel

Steel mill inventory: this week's hot rolling mill warehouse 1.0709 million tons, month-on-month-8.97%, year-on-year + 16.40%. There are two main reasons for the decline of factories and warehouses this week. First, due to the overhaul of steel mills and the rapid rise in raw material prices to compress production profits, the output of hot coils has declined and the pressure on factories and warehouses has slowed down. Second, the recent price correction is basically in place to overlay the market performance preference, the order sentiment of traders has warmed up, and the order taking and shipping volume of northern steel mills have increased, thus prompting the factory warehouse to decline significantly this week.

Figure 2: inventory trend chart of steel mills

Source: SMM Steel

Generally speaking, the situation of hot rolling warehouse reduction this week is more preferred than that of other varieties, especially the situation of the factory warehouse is about the same as that of the same period last year, the year-on-year growth rate of the warehouse is also narrowing, and the overall inventory pressure is gradually alleviating. According to the recent terminal survey, even if the room for the recovery of manufacturing demand in June is limited, there is basically no problem in maintaining the demand situation in May, so it is expected that after short-term consolidation, there is still room for follow-up hot volume spot prices to rise.