HRC inventories extend decline as production curbs, maintenance continue

SHANGHAI, Oct 25 (SMM) – Inventories of hot-rolled coil (HRC) in China fell this week for a second straight week, as production curbs or maintenance at steelmakers continued.

SMM data showed that stocks of HRC across social warehouses and steel mills decreased by 6.9% from a week ago to 3.07 million mt as of Thursday October 24.

On a yearly basis, stocks declined for a third week in a row and saw a drop of 9.4% as of October 24, larger than 4.6% a week ago.

China’s northern cities such as Tangshan, Handan and Wu’an re-intensified production curbs on steelmakers after the National Day holiday to combat smog as the winter approaches. Some other steel mills, meanwhile, were undertaking maintenance.

As of October 24, HRC inventories across Chinese steelmakers stood at 900,400 mt, down 5.1% from a week earlier and 4.2% from a year earlier.

Supply decline, together with steady demand supported by lower quotes from traders and a thaw in US-China trade tensions, lowered stocks across social warehouses.

HRC social stocks fell 7.7% week on week and 11.4% year on year to 2.17 million mt as of October 24.

Inventory pressure, however, may be greater than it appears, as stocks piled up at ports with steel road freight constrained after a heavily overloaded truck caused the fatal collapse of a highway bridge in Wuxi earlier this month.