Under the supply-demand pattern in the off-season, the total inventory of construction materials may accumulate next week.

This week, the total inventory of construction steel showed divergence. Specifically, the total rebar inventory increased by 0.42% WoW, while the total wire rod inventory decreased by 0.46% WoW. On the supply side, blast furnace steel mills are currently enjoying good profitability and relatively high production enthusiasm. However, driven by the "anti-rat race" policy and expectations for production cuts, as well as environmental protection-driven production restrictions in Tangshan and other regions, some steel mills have cut production and undergone maintenance, resulting in a decrease in construction steel production. This week, rebar prices in many regions rose more than steel scrap prices, improving the profitability of electric furnace steel mills. Some electric furnace steel mills have extended their operating hours. On the demand side, with the continuation of high summer temperatures and increased precipitation, the progress of downstream construction has slowed down, and it is difficult to see significant improvement in demand. This week, the total rebar inventory changed from a decrease to an increase.

This week, the total rebar inventory stood at 5.121 million mt, increasing by 21,200 mt or 0.42% WoW (previous value: -0.91%). Compared to the same period last lunar year, it decreased by 1.9578 million mt or 27.66% (previous value: -28.88%).

This week, the in-plant inventory of rebar was 1.7574 million mt, decreasing by 77,000 mt or 4.2% WoW (previous value: +0.12%). Compared to the same period last year, it decreased by 177,200 mt or 9.16% YoY (previous value: -4.3%). Currently, it is the traditional off-season for demand, and steel mills are facing increased supply pressure and reduced production enthusiasm. Additionally, considering risk control, steel mills have accelerated the transfer of in-plant inventory to the market end, resulting in a decrease in construction steel mills' inventory this week.

This week, the social inventory of rebar was 3.3636 million mt, increasing by 98,300 mt or 3.01% WoW (previous value: -1.48%). Compared to the same period last year, it decreased by 1.7806 million mt or 34.61% YoY (previous value: -37.85%). Recently, with the continuation of high temperatures, the actual terminal demand remains suppressed by seasonal factors, and the trading volume of steel has decreased MoM. This week, the social inventory changed from a decrease to an increase.

In summary, the current market is in the traditional off-season for the construction industry. High temperatures have led to a slowdown in construction progress at construction sites, and construction material demand continues to be suppressed. Although steel mills have expectations for production cuts, considering the continuity of production and profit factors, the decrease in steel production may be relatively limited. Therefore, it is expected that the total inventory of construction materials will accumulate next week.

SMM

Under the supply-demand pattern in the off-season, the total inventory of construction materials may accumulate next week.

Electric furnace mills saw significant profit recovery, with operating rates likely to rise further next week.

[SMM Analysis] Analysis of China's Non-oriented Electrical Steel Imports and Exports