[SMM hot volume] rising reluctantly, falling unwilling to hot roll prices can usher in a phased correction?

SMM Steel July 28, this week's mainstream market resources are expected to arrive at 183000 tons, 7000 tons less than last week. This week, it is mainly in Shanghai and Lecong, while the volume of goods arriving in Tianjin is basically stable.

Table 1: comparison of arrival in mainstream markets

Source: SMM Steel

Shanghai market: the volume of goods arriving in this market has increased steadily and slightly this week. Mainly due to the recent opening of the north-south price gap, some traders increased orders to the northern price-locking steel mills, leading to a slight increase in the volume of goods. Judging from the current fundamentals of the market, the small increase in supply is still replenishing out-of-stock specifications, and the release on the demand side is also relatively stable, so there is little contradiction in the short term. However, from the point of view of market sentiment and caution, terminal procurement and trade stocks are much more cautious than in the previous period, and fear of heights continues unabated, which significantly suppresses the current market prices. the superimposed northward movement continues to continue, and the supply gradually increases, so it is expected that subsequent spot prices will be under pressure.

Figure 1: comparison of arrival volume and spot price in Shanghai market

Source: SMM Steel

Lecong market: this week, the market continued to increase the volume of goods, the supply continues to increase, while the demand side is still in a state of stability, so the fundamentals are weaker than the previous period, coupled with the inventory has stopped falling and increasing, the attitude of traders has also changed from optimistic to cautious, suppressing the rise in prices in the market. At the same time, with the arrival of high temperature, some factories take high-temperature holidays, the terminal demand has the risk of weakening, and the superimposed supply is increasing, so it is expected that the follow-up risk of spot price correction in the market is greater.

Figure 2: comparison between the volume of goods from the market and the spot price

Source: SMM Steel

Tianjin market: recently, the arrival volume of the market is basically stable, the supply side has no obvious increment, the demand side also maintains a relatively stable situation, mostly on-demand procurement, the fundamentals are still stable, and spot prices are basically stable. In the short term, the demand side is still based on on-demand procurement, it is difficult to have volume. Due to the low inventory and weak willingness to sell at reduced prices, traders are expected to be still in the game stage between merchants and terminals, which also promotes the short-term spot price to fluctuate in a narrow range.

Figure 3: comparison of arrival volume and spot price in Tianjin market

Source: SMM Steel