SHANGHAI, Sep 25 (SMM) – Inventories of hot-rolled coils of steel sheets used to produce home appliances and cars in China continued to trend higher this week, as trades were muted in the spot market due to weak HRC futures and sluggish end-user demand.
SMM data showed that HRC stocks across social warehouses and steelmakers increased 0.75% in the week ended September 24 to 4.06 million mt, after a 2.21% gain in the previous week. The stocks were 25.71% higher than the same period last year.
HRC inventories across social warehouses
HRC futures remained weak this week, while in the spot market traders saw poor sales as buyers were cautious about restocking, which lifted HRC social inventories by 0.87% on the week to 2.86 million mt.
HRC inventories across Chinese steelmakers
HRC output dipped this week, but most of the traders were less active in ordering cargoes from steelmakers as weak HRC futures and sluggish end-user demand prompted them to reduce inventories to avoid risks, and this led to the slight increase in in-plant HRC inventories. SMM data showed that HRC stocks across steelmakers rose 0.46% on the week and 28.03% on the year to 1.2 million mt in the week ended September 24.
As of September 23, HRC total inventories rose 194,700 mt or 5.03% on the month, while the year-on-year increases in both social inventories and in-plant stocks expanded compared with previous weeks as trades failed to improve significantly in a typical high season. But end-user demand is likely to increase in the near term, helping ease inventory pressure.
SMM expects HRC output to fall in October as maintenance across major steelmakers is likely to lower output by about 536,000 mt, but total inventories may still rise further after the National Day holidays as demand will stagnate during the holidays.
