[SMM Steel Market Morning News] Xi Jinping Stressed High-Quality Urban Renewal During Shanghai Inspection

★Macro★

01 ★★★ [Xi Jinping Emphasizes Fully Implementing the People's City Concept and High-Quality Urban Renewal During Shanghai Inspection]

Xi Jinping, General Secretary of the CPC Central Committee, President of the PRC, and Chairman of the Central Military Commission, emphasized during an inspection in Shanghai on the 15th that high-quality urban renewal is a crucial lever for urban modernization. He called for the full implementation of the People's City concept, adhering to asking the people about their needs, their ideas, and the effectiveness of policies, and for meticulously, thoroughly, and concretely advancing all urban renewal work to continuously enhance residents' sense of gain, happiness, and security.

02 ★★★ [National Energy Administration: Total Electricity Consumption Up 5.3% YoY, January-June]

The National Energy Administration released data on total electricity consumption for June. In June, total electricity consumption was 898.1 billion kWh, up 3.7% YoY. By sector, primary industry consumption was 13.6 billion kWh, up 2.0% YoY. Secondary industry consumption was 573.4 billion kWh, up 4.7% YoY, of which industrial consumption was 568.3 billion kWh, up 4.9% YoY, and consumption by high-tech and equipment manufacturing was 112.1 billion kWh, up 10.3% YoY. Tertiary industry consumption was 186 billion kWh, up 5.6% YoY, with charging and battery swapping services and internet data services consuming 14.8 billion kWh and 9.1 billion kWh, respectively, representing growth rates of 57.1% and 41.4%. Urban and rural residential consumption was 125.1 billion kWh, down 3.1% YoY. From January to June, cumulative total electricity consumption reached 5,099.9 billion kWh, up 5.3% YoY.

03 ★★ [Central Bank: RMB Loans Increased by 1.072 Trillion Yuan in H1]

Central bank data shows that RMB loans increased by 1.072 trillion yuan in H1. By sector, household loans decreased by 366.8 billion yuan, with short-term loans down by 588.1 billion yuan and medium and long-term loans up by 221.2 billion yuan. Loans to enterprises and institutions increased by 1.113 trillion yuan, with short-term loans up by 459 billion yuan, medium and long-term loans up by 555 billion yuan, and bill financing up by 814.3 billion yuan. Loans to non-banking financial institutions decreased by 422.3 billion yuan.

04 ★★ [Central Bank: Policy Stance Should Not Be Judged by Single OMO Volume; Short-End Market Rates Are a More Suitable Indicator]

At a State Council Information Office press conference on July 15, PBOC Deputy Governor Zou Lan stated that the volume and maturity varieties of open market operations (OMO) vary significantly, mainly because factors affecting banking system liquidity supply and demand are complex, with fiscal revenues and expenditures, reserve requirements, and cash issuance all having significant impacts. The central bank considers these factors comprehensively to reasonably arrange the variety and scale of OMOs. Sometimes this involves withdrawing liquidity, sometimes injecting it, with the ultimate goal of keeping total liquidity at an appropriate level, thus promoting the stable operation of short-end interest rates near the policy rate. The volume of a single operation serves the need to regulate total liquidity, and one should not judge the central bank's policy stance based on the volume of a single operation. Compared with the operation volume, short-end market interest rates are a more suitable indicator to observe.

★Industry and Downstream★

01 ★★ [SMM Blast Furnace Operating Rate] Steel Mill Maintenance Increases, Hot Metal Production Continues to Decline

According to an SMM survey, as of July 15, the blast furnace operating rate at the 242 steel mills tracked by SMM was 89.79%, up 0.01 percentage point WoW. The capacity utilization rate was 89.99%, down 0.09 percentage point WoW. Daily average hot metal production among sampled mills was 2.4382 million mt, down 2,400 mt WoW.

Based on the latest SMM survey, a total of three blast furnaces underwent maintenance in China this week, located in Hebei and Shanxi; during the same period, three blast furnaces resumed production, concentrated in Hebei, Jilin, and Yunnan. Affected by environmental protection inspections, the current decline in hot metal production mainly came from Hebei, with the overall drop being relatively significant. Looking ahead to next week, hot metal production is expected to continue its downward trend: on one hand, steel mill profits remain under pressure; on the other hand, environmental protection inspections are relatively stringent, and some mills may continue to arrange maintenance plans. Overall, hot metal production is very likely to decline further next week.

02 ★★★ [SMM Building Materials Inventory by Region]

As of July 15, Hangzhou's building materials inventory this week stood at 1.205 million mt, up 10,000 mt WoW, a WoW increase of 0.84%.

Xi'an's total building materials inventory this week was 344,000 mt, down 6,000 mt WoW, a WoW decrease of 1.71%, and a YoY increase of 3.61%.

Guiyang's total building materials inventory this week was 92,500 mt, up 800 mt WoW, an increase of 0.87%; among them, rebar inventory was 68,700 mt, up 4,000 mt WoW; wire rod inventory was 23,800 mt, down 3,200 mt WoW.

03 ★★★ [SMM Hot-Rolled Coil Inventory by Region]

Shenyang's HRC inventory this week was 201,400 mt, up 12,800 mt WoW, a 6.79% increase. On a YoY basis, it was up 11,800 mt, or 6.22%.

Lecong's HRC inventory this week was 921,400 mt, down 9,100 mt WoW, a decrease of 0.98%; up 33.48% on a solar calendar YoY basis and up 34.10% on a lunar calendar YoY basis.

Ningbo's large-sample HRC inventory this week was 309,800 mt, up 15,000 mt WoW, an increase of 4.91%, and a 15.04% increase on a lunar calendar YoY basis.

Shanghai's HRC inventory this week was 456,200 mt, down 12,500 mt WoW, a decrease of 2.67%; up 67.91% on a solar calendar YoY basis.

04 ★★[CPCA: Retail Sales of New Energy Passenger Vehicles Reached 280,000 Units, July 1-12, Down 8% YoY]

According to CPCA data, retail sales of new energy passenger vehicles in China reached 280,000 units, July 1-12, down 8% YoY from the same period last July and down 3% MoM. Year-to-date cumulative retail sales totaled 4.984 million units, down 14% YoY. Wholesale deliveries of new energy passenger vehicles by manufacturers reached 262,000 units, July 1-12, down 9% YoY from the same period last July and down 15% MoM. Year-to-date cumulative wholesale deliveries totaled 7.05 million units, up 4% YoY.

05 ★★[CPCA: Retail Sales of Passenger Vehicles Reached 443,000 Units, July 1-12, Down 15% YoY]

According to CPCA data, retail sales of passenger vehicles in China reached 443,000 units, July 1-12, down 15% YoY from the same period last July and down 1% MoM. Year-to-date cumulative retail sales totaled 9.144 million units, down 20% YoY. Wholesale deliveries of passenger vehicles by manufacturers reached 379,000 units, July 1-12, down 26% YoY from the same period last July and down 17% MoM. Year-to-date cumulative wholesale deliveries totaled 2.926 million units, down 6% YoY.

★Other Hot Topics★

⭕[Iran Will Not Beg the US for Talks]Iranian Deputy Foreign Minister Gharibabadi stated in an interview on July 14 local time that the passage of ships through the Strait of Hormuz is of little importance to the US, a fact that US President Trump himself acknowledges, though the US does not want Iran to hold actual sovereignty over the Strait of Hormuz. Gharibabadi also stated that Iran has never left the negotiating table; it was the US that tore up the Islamabad Memorandum of Understanding, and Iran will never humiliate itself by asking to negotiate with the US first.

⭕[IMO Says Strait of Hormuz Still Too Dangerous for Merchant Ships]The International Maritime Organization stated that the Strait of Hormuz remains too dangerous for merchant ships to risk passage. This is the most severe navigational safety warning issued to the shipping industry since the breakdown of the temporary US-Iran peace agreement.

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