Social inventory from up to down demand season in advance of the arrival?

This year, due to the coVID-19 epidemic, the release of steel demand has been delayed, and the recovery time of steel social stocks has also been delayed.However, it was only delayed for a week. Since late June, steel social inventory still followed the market rules and showed a seasonal recovery, and continued to grow for 6 weeks.This week, however, there was an uncharacteristic turn in social inventory from up to down.

So, first of all to review the overall situation of the steel society since this year.From the beginning of this year, steel society inventory in the rising state;Under the impact of the Lunar New Year and the COVID-19 epidemic, there has been a long drawdown process.After more than two months of accumulation, steel social inventory reached the highest level in nearly a decade in mid-March.

Since the middle of March, with the improvement of the epidemic situation in China, all walks of life have speeded up the resumption of work and production, steel demand began to pick up, steel social inventory fell.Inventories fell the most from mid-March to the end of April, dropping by a cumulative 6.255m tonnes, or 27%.The pace of inventory decline has slowed somewhat since May, and slowed significantly in June.Finally, in late June, the inventory stopped the "fourteen consecutive decline" pace, there is a rebound.

In the impact of the low steel demand season, steel social inventory continued to rise, there was a "six consecutive rise";But this week that trend was broken, with a fall in social stocks.By August 7, 2020, the social inventory of 29 key cities according to statistics is 13.79 million tons, which has decreased by 162,000 tons or 1.16% compared with last week.But it is worth noting that the current social inventory is still higher than the same period last year 2.203 million tons, an increase of 19.01 percent.

The steel social inventory decline is expected, with the arrival of August, the high temperature rainy weather gradually improved, coupled with the stimulus of the relevant national policies, steel demand will gradually recover, steel social inventory will naturally appear by the rise to fall.

In terms of steel output, rapid recovery began in April this year. The average daily output of crude steel reached a record high in May and reached a new record high in June.According to the latest data of China Iron and Steel Association, in the late July of 2020, key steel enterprises produced a total of 23,896,000 tons of crude steel and 23,979,300 tons of steel, and the average daily output of crude steel was 2.172,400 tons, with a month-on-month growth of 1.59% and a year-on-year growth of 11.65%, hitting a new record high.

In the face of such high steel production, steel social inventory decline can not leave the demand credit.In order to recover the loss of economic decline in the first quarter, the state has put forward a series of policies to stabilize growth, promote development and ensure people's livelihood, such as "six stability", "six guarantees" and "two new and one heavy".We will step up and speed up the issuance of special local government bonds, and vigorously promote the approval and implementation of key projects.Therefore, the recent confidence in the market, steel rebar futures prices rose sharply, breaking through the 3800 yuan mark.

As of August 7, the previous rebar futures contract of 2010 fell violently, closing at 3832 yuan/ton, down 23 yuan/ton, or 0.6%;Compared with the same period last month, it increased by 198 yuan/ton, or 5.45%.As of August 7, according to the monitoring data shows that the ten key cities for the domestic tertiary rebar (Φ 25 mm) the average price is 3797 yuan/ton, than the same period last month rose 94 yuan/ton, a 2.54% increase.Rebar futures and spot prices have risen to varying degrees.

This year, many construction projects have been delayed by the epidemic, and demand has lagged behind. As a result, downstream demand is relatively resilient.In offset the overall impact of the off-season, this year in July, August steel demand better than in previous years, showing the off-season is not light market.At present, many businesses are optimistic about the second half of the steel demand, in advance to prepare for the arrival of the steel demand peak season in September and October.