According to SMM Steel on July 2, the total inventory of hot-rolled coil this week is 3.5665 million tons, with a month-on-month ratio of + 1.89% and a year-on-year ratio of + 10.63%. Hot coil production remained stable this week, but the Dragon Boat Festival holiday reduced the number of trading days in the market, while the rainy season and the weakening of the current cycle dragged down market sentiment. The trading situation was relatively general, leading to the continuation of the hot rolling stock and the expansion of month-on-month growth.
Table 1: comparison of hot rolling inventory
Source: SMM Steel
Social inventory: 2.5245 million tons of hot rolling stock this week, with a month-on-month ratio of + 2.17% and + 8.82% compared with the same period last year. This week, the stock of the hot rolling society ended 13 consecutive declines and became a tired stock. On the one hand, the trading volume and trading days of the hot roll market this week are lower than those in the previous period, and the market output has decreased; on the other hand, most steel mills have delivered goods steadily, and even the arrival volume in some areas has increased, resulting in increased pressure on the public treasury and increased inventory from decline to increase.
Figure 1: social inventory trend chart
Source: SMM Steel
Steel mill inventory: this week's hot rolling mill warehouse 1.0421 million tons, month-on-month + 1.21%, year-on-year + 15.29%. This week, the hot rolling mill warehouse continues to accumulate, the output of the steel mill remains high, the spot price is stable and weak, and the festive factors overlay the market transaction in general, resulting in the weakening of the daily pricing of steel factory shipments and the slight accumulation of the factory warehouse.
Figure 2: inventory trend chart of steel mills
Source: SMM Steel
Taking into account holidays, market conditions and seasonal factors, SMM analysis believes that the accumulation of inventory is expected, there is no need to worry too much.
On the supply side, with the arrival of July, the preliminary production scheduling survey of SMM found that the inspection and repair output of domestic mainstream hot rolling mills in July was higher than the newly added maintenance quantity, on the other hand, as the current steel mill production profit of coil plate was higher than that of thread, some steel mills with conversion capacity had turned some building materials hot metal to hot coil, resulting in an increase of about 377000 tons of hot coil output in July.
On the demand side, according to SMM research, the current domestic mainstream market traders reflect that the current market demand is in a stable state compared with the previous period, and some market demand has declined slightly. Considering that the current traders and terminal inventories in most markets are at a medium-to-low level, it is expected that purchases will be released steadily in the short term.
On the whole, the market supply and demand situation in July may be slightly weaker than that in June, which makes it more difficult to remove inventory. However, taking into account the current mainstream market traders and terminal inventory pressure is low, East and South China market is still relatively common lack of specifications, market sentiment is cautious and optimistic and other factors, even in the situation of slow inventory growth, SMM analysis that market prices do not have significant downward conditions, it is expected to maintain shock operation in the short term.