[SMM thread] the stock continues, and the "embarrassing" situation of steel price does not stop.

As of July 30, the country's total inventory of building materials was 11.1429 million tons, with a month-on-month ratio of + 1.9%, compared with the same period last year. The steady accumulation rate has been continued this week. The steady increase in production meets demand that has not yet been fully released, and the continued accumulation of stocks still seems to be expected.

Table 1: Overview of thread inventory

Source: SMM

Table 2: comparison of Thread inventory prices from 2018 to 2020

Source: SMM

Specifically:

The inventory in the plant is 3.4566 million tons, an increase of 106200 tons this week, + 3.2% month-on-month, and + 36.2% year-on-year.

This week, factories and warehouses continued to be tired, with an increase of 0.3 percentage points, mainly due to the gradual recovery of transportation after "flood discharge" and the acceleration of the transfer of factories and warehouses to social warehouses. But on the one hand, the output of steel mills continues to increase. According to the survey of SMM, as of July 28th, the operating rate of 34 independent electric arc furnace steel mills in China was 81.27%. It rose 2.72 percentage points from last week, 3.54 percentage points higher than the same period last month. At the same time, the operating rate of blast furnace in the fifth week of July was 90.3%, up 0.23% from last week. On the other hand, the "efficiency" of improving demand is on the low side, and some areas are still disturbed by seasonal factors. Although shipments have improved compared with the previous period, the performance is not obvious, which leads to the high-speed accumulation of factories and warehouses.

Figure 1: an overview of the trend of thread factory warehouse from 2016 to now

Source: SMM

Social inventory is 7.6863 million tons, an increase of 88900 tons this week, + 1.2% month-on-month and + 23.1% year-on-year.

Although the range of areas affected by seasonal interference is narrowing and the demand is better than that in the previous period, the transfer speed from factory treasury to social warehouse is also increasing. Under this dual effect, the social treasury maintains a stable state of accumulation this week.

Figure 2: an overview of the trend of Thread Community Library since 2016

Source: SMM

Table 3: a list of weather conditions in mainstream cities from July 30 to August 15

In the later stage, the weather disturbance has not stopped, and the road of tiredness is still extending. And expectation and reality are still in the process of game-the marginal improvement of demand, the strength of the cost end and strong expectations form a strong bottom support for prices, while the high pressure of inventory, demand has not been completely "liberated" to suppress spot prices. Spot prices are still in an awkward volatility range.