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SMM hot roll inventory: the stock continues, can the volume price ride the wind and waves?
Jul 9,2020 19:39CST
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Source:SMM
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[SMM Hot Volume] the library continues, can the price of the volume still ride the wind and waves?

According to SMM Steel on July 9: this week, the total inventory of hot-rolled coil is 3.6332 million tons, with a month-on-month ratio of + 1.89% and + 8.5% compared with the same period last year. Production of hot rolls this week has increased compared with the previous period, but under the stimulus of a sharp rise in volume, the market turnover is better than last week. In the context of increased supply and strong stable demand, the hot volume continued to be burdened with reserves, and the growth rate was more stable than that of the previous period.

Table 1: comparison of hot rolling inventory

Source: SMM Steel

Social inventory: 2.6002 million tons of hot rolling stock this week, + 3% month-on-month, + 9.09% compared with the same period last year. This week, the hot social inventory continued to accumulate, and the month-on-month growth rate expanded. On the one hand, the factory and warehouse shipments to the social warehouse have increased this week; on the other hand, according to SMM market tracking, the release of speculative demand in terms of market transactions across the country this week is more obvious, the terminal demand is stable and strong, and the pace of exiting the social warehouse is weaker than that of entering the warehouse, resulting in the continued accumulation of the national hot roll social warehouse this week.

Figure 1: social inventory trend chart

Source: SMM Steel

Steel mill inventory: this week's hot rolling mill warehouse 1.033 million tons, month-on-month ratio of-0.87%, year-on-year + 7.04%. The hot coil factory warehouse increased to fall this week, mainly due to the fact that, driven by the volume surface, the national average price of hot coil rose 128 yuan / ton this week compared with last week, the market transaction situation improved significantly, the speculative demand of traders was released, and the daily pricing steel plant was in good condition. At the same time, the opening of the price difference between the north and the south has increased the shipments of some northern steel mills to the East and South China market, accelerating the transfer of the factory to the social treasury.

Figure 2: inventory trend chart of steel mills

Source: SMM Steel

In recent years, the overall fluctuation of the total inventory of hot rolls is small, and the market supply and demand is still in a tight balance.

Next, on the supply side, driven by profits, steel mills with conversion capacity have increased their production of hot coils. SMM scheduling data show that the planned production of hot rolled coils in domestic mainstream steel mills increased by 550000 tons in July compared with June.

On the demand side, according to the SMM hot volume demand report, supported by the continued development of infrastructure and the further recovery of automobile and home appliance production and sales, although the growth rate of demand for sheet coil slowed down compared with the previous period, the overall growth rate still maintained a steady growth trend.

On the whole, with the increase in supply and the seasonal slowdown in the growth rate of demand, it is more difficult to remove the hot volume. However, under the background of the current high sentiment in the capital market, the strong trend of futures volumes, and the low inventory pressure of spot traders, short-term hot volume prices are easy to rise and difficult to fall, and are expected to continue to be stable and strong.

Weekly review

For queries, please contact Frank LIU at liuxiaolei@smm.cn

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