Due to rapid inventory accumulation before CNY holiday, inventory pressure of construction steel may be greater than in previous years

As of February 1, the total inventory of domestic construction steel continued to accumulate rapidly. Rebar inventory increased by 758,900 mt this week compared with last week, of which factory warehouses increased by 99,400 mt and social warehouses increased by 659,500 mt. On the supply side, according to SMM research, some BF steel plants resumed production as planned this week, and the impact of building materials maintenance was 1.6358 million mt, a decrease of 60,300 mt from last week. However, in terms of EF steel plants, more than 60% of steel plants have shut down for vacation. The operating rate of electric furnaces in this period was only 22.56%, and the overall supply of building materials has decreased. On the demand side, steel traders are on holiday one after another, speculative purchasing in the market has almost stagnated, and many downstream construction sites have been suspended. Only a few projects are still rushing to work. Demand is extremely shrinking, and inventory accumulation has accelerated this week.

The total rebar inventory this week was 7.155 million mt, an increase of 758,900 mt from last week, an increase of 11.87% (previous value 6.10%), and a year-on-year increase of 889,000 mt, an increase of 14.19% (previous value 12.72%).

This inplant inventory of rebar was 1.8757 million mt, an increase of 58,200 mt from last week, a month-on-month increase of 3.20% (previous value -2.78%), and a year-on-year increase of 119,300 mt, a year-on-year increase of 6.79% (previous value -2.52%). Downstream shipments were hampered, traders' willingness to receive goods was weak, and factory inventories turned from falling to increasing this week, accumulating slightly.

This week's rebar social inventory was 4.5203 million mt, an increase of 309,500 mt from last week, a week-on-week increase of 7.35% (previous value: 5.27%); an increase of 602,200 mt compared with the same period of the lunar calendar last year, a year-on-year decrease of 15.37% (previous value: 20.21%). This week, social warehouses have continued to accumulate significantly. The reason is that on the one hand, construction sites have been suspended due to weather effects at the end of the year, and demand has shrunk; on the other hand, it has basically entered the end of winter storage, and warehouses are being put into storage in various places.

Looking ahead, on the supply side, although some BF under inspection are expected to resume production next week, considering that nearly 60% of EF are planned to be shut down in late January, the production load will face a rapid decline, and the overall output may still be weak; On the demand side, as the end of the year approaches, downstream construction sites are shutting down one after another, and demand will continue to shrink. In summary, building materials inventories are expected to continue to accelerate accumulation.