Supply Overview

This week, the supply of the five major steel varieties reached 8.9149 million tons, a decrease of 57.2 thousand tons from the previous week, a drop of 0.6%. The production of medium-sized steel bars increased significantly this week, while the production of other varieties decreased or remained basically the same. The core driving factor is that some provinces have seen a slight increase in production due to extended production time and the resumption of production line repairs.

Inventory Status

This week, the total inventory of the five major steel varieties was 17.6158 million tons, a decrease of 52.2 thousand tons from the previous week, a drop of 0.3%. Except for hot-rolled and cold-rolled, the total inventory of the five major varieties decreased on a weekly basis: the factory inventory decreased on a weekly basis, with the increase mainly contributed by the rebar. The social inventory increased on a weekly basis, with the increase also mainly contributed by the rebar.

Consumption Insights

This week, the weekly consumption volume of the five major varieties was 8.9672 million tons, an increase of 0.9% from the previous week; among which, the consumption of building materials increased by 6.8% month-on-month, while the consumption of plate materials decreased by 2.2% month-on-month. The apparent consumption of the five major varieties this week showed an increase in building materials and a decrease in plate materials. Building materials have seen an increase in apparent consumption due to the flow of resources between regions, while plate materials, constrained by high production, show a situation of strong supply and demand, with a slight decrease in demand month-on-month.

Outlook for Next Week

On the supply side, as the current inventory pressure of steel mills is still acceptable and the actual profit is still near the break-even line, it is expected that the output may rise again, but the actual increase will be limited.

On the demand side, the pressure of the off-season is gradually emerging. According to the research of Century Construction, as of June 18, the capital arrival rate of the sample construction sites was 63.64%, a decrease of 0.11 percentage points from the previous week. The capital arrival rate of the construction site has fallen against the trend, and the core indicators of real estate in May have decreased year-on-year, and the real estate data has not improved significantly. The weak situation of steel demand has not changed, and no obvious driving factors have been seen in the short term.

Macroscopically, it is still in a period of macroscopic vacuum, and the macroscopic benefits brought are insufficient.

Comprehensively, in the case of insufficient macroscopic impetus and acceptable inventory pressure of steel mills, the contradiction is not prominent, and it is expected that the steel price will fluctuate in the short term.

Fundamental Interpretation

According to Mysteel statistics, in terms of rebar, this week the output of rebar continued to decrease, with a total reduction of 18.8 thousand tons. Looking at the regions, the reduction is mainly concentrated in the East China and Northwest regions, among which Xinjiang has a large inventory pressure and low prices, leading to a large reduction in production by steel mills, and East China's production continues to decline due to changes in production and maintenance. The production in other regions is not significantly fluctuating.

For wire rod, this week the production of wire rod increased from a decrease to an increase, with a total increase of 27.6 thousand tons. Looking at the regions, the increase is mainly concentrated in the Northeast and North China regions, among which Heilongjiang and Shanxi have increased production by 23.1 thousand tons due to extended production time and the resumption of production line repairs, and the production in other provinces is not significantly fluctuating.

For hot-rolled coil, this week the actual output of hot-rolled coil decreased to 3.2072 million tons, a decrease of 69.3 thousand tons from the previous week, mainly in the northern region. The main reason is the reduction in RG crude steel production, while the BG production line resumed production, leading to an increase in output.

Domestic Five Major Steel Mill Inventories

According to Mysteel statistics, in terms of rebar, this week the factory inventory turned from an increase to a decrease, with a total reduction of 75.7 thousand tons. Looking at the regions, except for the Northeast and Southwest, the inventory in other regions has decreased to varying degrees, and due to the reduction in supply, the de-stocking in Central China, South China, and Northwest China is more than 20 thousand tons.

For wire rod, this week the factory inventory slightly decreased, with a total reduction of 20.9 thousand tons. Looking at the regions, except for Central China and Southwest, the inventory in other regions has decreased to varying degrees, and the North China region has the largest reduction, with Shanxi reducing the inventory by 12 thousand tons, and the inventory in other provinces fluctuates less than 10 thousand tons, basically the same as last week.

For hot-rolled coil, the factory inventory this week slightly decreased compared to last week, with the main reduction concentrated in the southern region, mainly due to the end of the month, the steel mill's outflow speed has increased.

Domestic Five Major Social Inventories

According to Mysteel statistics, in terms of building materials, taking rebar as an example, from the three major regions, East China and North China decreased by 128 thousand tons and 114 thousand tons respectively on a weekly basis, while the South increased by 476 thousand tons on a weekly basis; from the seven major regions, except for Central China, South China, and North China, other regions are all in a state of de-stocking.

For hot-rolled coil, from the three major regions, East China and North China increased by 473 thousand tons and 180 thousand tons respectively on a weekly basis, while the South decreased by 434 thousand tons on a weekly basis; from the seven major regions, except for East China, North China, and Northeast, other regions are all in a state of de-stocking.

According to Mysteel statistics, this week the total inventory of the five major varieties was 17.6158 million tons, a decrease of 52.2 thousand tons from the previous week, a drop of 0.3%. Among them, the building materials inventory decreased by 696 thousand tons on a weekly basis, a drop of 0.7%; the plate materials inventory increased by 173 thousand tons on a weekly basis, an increase of 0.21%. The previous period's total inventory was 17.668 million tons, an increase of 0.5% on a weekly basis. Among them, the building materials inventory increased by 1322 thousand tons on a weekly basis, an increase of 1.40%; the plate materials inventory decreased by 448 thousand tons on a weekly basis, a drop of 0.54%.