SMM Steel, July 9: according to the latest tracking of SMM, the planned hot-rolled commodity production of 35 mainstream hot-rolled steel mills surveyed in July totaled 9.9164 million tons, an increase of 5.9% over the actual hot-rolled commodity output in June.
Figure 1: hot-rolled sample planned quantity of hot-rolled commodity in mainstream steel mills
Source: SMM Steel
Domestic and foreign trade: domestic terminal demand has gradually recovered, and the volume of domestic trade has further increased. However, under the influence of the deterioration of the epidemic, there are no obvious signs of improvement in foreign orders. Superimposed export prices are on the low side, and steel mills are not willing to export, so the export volume of hot rolls continues to decline this month. Among them,
Domestic trade: domestic sales of hot-rolled coil in July were 9.6914 million tons, an increase of 577100 tons over the previous month, and an increase of 6.3% over the previous month.
Foreign trade: the export volume of hot-rolled coil in July was 225000 tons, 25500 tons less than that of the previous month, or 10.2% lower than the previous month.
From a regional point of view, there are different increments in each region in July, and the increments of steel mills in the north and south-central regions are significant. The output of steel mills in eastern and western China increased slightly.
In the northern region, the planned volume of hot-rolled coil commodities totaled 4.8774 million tons, an increase of 198600 tons, or 4.24%, over the previous month. The planned export volume totaled 75000 tons, a decrease of 25500 tons, or 25.37%, compared with the previous month.
East China: the planned volume of hot-rolled coil commodities totaled 2.931 million tons, an increase of 79000 tons or 2.77% over the previous month. The planned export volume totaled 150000 tons, which was unchanged from the previous month.
Central and South China: the planned volume of hot-rolled coil commodities totaled 1.74 million tons, an increase of 230000 tons, or 15.23%, over the previous month. There is no export this month;
In the western region, the planned volume of hot-rolled coil commodities totaled 368000 tons, an increase of 44000 tons or 13.58% over the previous month. There is no export this month;
Figure 2: regional proportion of planned output of national hot coil mainstream steel mills
Source: SMM Steel
Generally speaking, the planned volume of hot-rolled commercial materials in July is more obvious than that in June. It is mainly due to the fact that the increment caused by steel plant overhaul and hot metal turning to hot coil is significantly larger than the hot coil reduction caused by the new steel plant overhaul. Among them,
Increment of overhaul and resumption of production of steel mills: according to SMM statistics, the increase of overhaul and resumption of production of steel mills in July is about 398000 tons, while the amount of new overhaul affected by steel mills is about 290000 tons, and there is still an increase of about 108000 tons of hot coil after hedging, prompting the planned output of steel mills to increase in July.
Figure 3: maintenance details of mainstream hot coil steel mills
Hot metal for building materials turned to hot rolls: affected by the Meiyu weather, the release of terminal demand for building materials has continued to be suppressed since June, prompting the spot prices of building materials to basically maintain a weak and stable state. And hot volume June fundamentals are better, superimposed macro positive and environmental protection production limit news stimulation, spot prices all the way up. Up to now, the price of hot coil in multi-area is significantly higher than that of thread, which leads to the gradual transformation of the profit of building materials and hot coil in steel mills. Especially in East and South China, the profit of hot coil production is significantly higher than that of thread. Driven by profits, some steel mills have gradually turned the threaded hot metal into hot coils, resulting in an increase in hot coil production this month.
Figure 4: details of hot metal steering in steel mills
Source: SMM Steel
Summary: the planned volume of hot-rolled coil commodities increased significantly in July compared with the previous month, while according to SMM, the incremental space is relatively limited, so the overall fundamentals are weaker than in June, and it is expected that the overall spot price increase will be less optimistic than in June.
However, it is worth noting that under the influence of the regional price difference and the tendency of steel mills, the fundamental situation of each region is divided. Among them, affected by the price difference between the north and the south, the supply of hot rolls in East China is still tight, the release of superimposed demand is OK, and the fundamentals of the region are still good, supporting spot prices to rise strongly. The southern and northern regions are relatively weak. Mainly because the hot coil output of steel mills in South China and North China has increased more, the pressure on the supply side has gradually intensified, while the demand side has been maintained at a relatively stable level, which makes the fundamentals of the two regions tilt gradually, and the strength to support the rise in spot prices is also relatively weak. Therefore, as far as July is concerned, it is expected that the subsequent spot price rise of hot rolls in East China will be stronger than that in the southern and northern markets.