Both supply and demand are increasing, and the backlog of inventory continued to be digested [SMM Building Materials Inventory]

Construction steel inventories continued to grow this week. Rebar inventories rose by 8.25% WoW and wire rods inventories rose by 6.23% WoW, with the growth rates narrowing significantly. On the supply, the impact of BF steel mills maintenance was 1.6328 million tons in the week, down 70,900 tons. In terms of EF steel mills, the operating rate of 50 electric furnace steel plants that mainly produce building materials was 33.76%, up 30.32 percentage points . The overall output has rebounded. On the demand, after the Lantern Festival, downstream began to resume work on a large scale, and steel demand is gradually recovering. However, considering the recent frequent weather disturbances, procurement plans may be suppressed, and the inventory growth during CNY is still being digested.

The total rebar inventory in the week was 11.885 million tons, up 8.25% (previous value 32.82%) WoW, and 1.92% (previous value 3.93%) YoY.

Last week, rebar inventory at factory was 3.5429 million tons, up 5.30% (previous value 43.15%) MoM, but down 2.26% (previous value -0.51%) YoY. The inventory pressure in the factory is relatively high, but the impact on traders' willingness to receive goods is limited. The inventory is still being digested.

In the week, rebar social inventory is 8.3422 million tons, up 9.55% WoW (previous value 28.72%), or 3.80% (previous value 6.02%) YoY. Demand gradually recovered after the holidays, with a rebound in mid-week. Terminal and market purchasing enthusiasm increased slightly, and the growth rate of social inventory slowed down.

Looking forward, on the supply, in terms of BF steel mills, the recent decline in raw materials has exceeded that of finished products, and the losses of steel mills may be narrowed. Driven by profits, some blast furnaces that were suspended to control losses may resume production. As the production of electric furnace steel mills will be recovered, the supply is expected to recover; on the demand, weather disturbance weakened amid peak season, and demand is expected to recover quickly with the large-scale production resumption in the downturn. In summary, both supply and demand are increasing, and contradictions between supply and demand will continue to be digested. It is expected that inventory growth will slow down further next week.