[SMM Construction Steel Inventory] Supply Declines, Total Construction Steel Inventory Continues to Fall This Week

This week, the total inventory of construction steel continued to decline. Specifically, the total inventory of rebar decreased by 1.82% WoW, while the total inventory of wire rod increased by 0.68% WoW. On the supply side, the operating rates of both BF and EAF steel mills declined this week. Currently, steel mills in Shaanxi have halted production for maintenance due to declining profitability, leading to a reduction in pig iron production. The production situation of EAF steel mills varied. One EAF mill in east China resumed production, while in the southwest region, market profitability recovered somewhat due to electricity subsidies, prompting some EAF mills to extend their operating hours. In south China, due to rainy weather and difficulties in collecting steel scrap, overall profitability was poor, and some EAF mills with severe losses halted production for maintenance. On the demand side, affected by high temperatures in the north and rainy weather in the south, the downstream procurement progress slowed down. Additionally, data on real estate investment and new construction starts continued to decline, while infrastructure investment remained stable but not strong.

This week, the total inventory of rebar was 5.3786 million mt, down 99,600 mt WoW, a decrease of 1.82% (previous value: -3.66%). Compared to the same period of the lunar calendar last year, it decreased by 1.9139 million mt, a decrease of 26.24% (previous value: -24.25%).

This week, the in-plant inventory of rebar was 1.8813 million mt, down 16,900 mt WoW, a decrease of 0.89% (previous value: -0.31%). Compared to the same period last year, it decreased by 224,000 mt, a YoY decline of 10.64% (previous value: -7.4%). This week, the operating rates of both BF and EAF steel mills declined, leading to a reduction in overall supply levels. Additionally, the current direct supply situation of steel mills was moderate, resulting in a decrease in the in-plant inventory of construction steel.

This week, the social inventory of rebar was 3.4973 million mt, down 82,700 mt WoW, a decrease of 2.31% (previous value: -5.35%). Compared to the same period last year, it decreased by 1.6899 million mt, a YoY decline of 32.58% (previous value: -30.92%). Affected by high temperatures in the north and rainy weather in the south, the downstream procurement progress slowed down. Although the social inventory decreased this week, the overall decline narrowed.

In summary, the total inventory of construction steel continued to decline this week. However, considering the approaching high school and college entrance examinations, some construction sites will be prohibited from operating during certain time periods, and the expectation of weakening marginal demand remains. The short-term improvement in sentiment may not be able to sustainably drive up steel prices. Therefore, it is expected that steel inventory may decline next week, but the decline will significantly narrow.