In July, the social inventory of stainless steel decreased slightly by 0.13%, with decent destocking of 300-series stainless steel but future digestion under pressure [SMM Analysis]

As of August 9, the latest statistics from SMM showed that the total social inventory of stainless steel was about 980,900 mt, up 1.74% WoW but down 0.13% MoM. Specifically:

The social inventory of 200-series stainless steel was about 280,700 mt, up 0.95% WoW and 2.55% MoM;

The social inventory of 300-series stainless steel was about 557,700 mt, up 2.07% WoW and down 1.49% MoM;

The social inventory of 400-series stainless steel was about 142,500 mt, up 2.05% WoW and 0.09% MoM.

In July, as the overall scheduled production of stainless steel declined, supply contracted. The destocking of 300-series stainless steel was relatively ideal, with a monthly destocking rate of 3.08% as of August 1. However, it should be noted that the decline in the social inventory of 300-series stainless steel in July was largely due to the outflow of warrants after several tens of thousands of short orders were closed by the steel mills, which then converted the warrants into spot inventory handed over to agents. The low-priced and large volume of warrants suppressed spot market transactions on the one hand, and on the other hand, the market arrivals increased significantly after entering August. Additionally, a stainless steel mill in east China applied for bankruptcy reorganization in July, but its actual production situation was more stable compared to June and July, and the volume of goods sent to Foshan in August increased significantly. Against the backdrop of expected growth in stainless steel production in August, it is anticipated that social inventory will continue to remain at a high level, making it difficult to digest.