[SMM HRC Weekly Balance & Social Inventory Overview] Strong Supply and Demand, Social Inventory Declines

Ø  Weekly Balance of HRC

Ø  HRC Production Continued to Increase WoW This Week

This week, some steel mills resumed production after maintenance, and HRC production continued to rebound.

Ø  HRC Social Inventory Slightly Declined WoW This Week

According to SMM statistics, the HRC social inventory across 86 warehouses nationwide (large sample) was 2.9195 million mt this week, down 38,000 mt WoW (-1.28%) and down 18.56% YoY based on the lunar calendar. This week, the national social inventory declined. By region, east China and north-east China saw destocking, while south China, central China, and north China continued the inventory buildup trend.

Details are as follows:

l  [Shanghai] Inventory in Shanghai Declined in the Second Week Before the Holiday

This week, HRC inventory in Shanghai was 252,900 mt, down 6,300 mt WoW (-2.43%), with a Gregorian YoY decline of 30.81% and a lunar YoY decline of 28.52%.

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l  [Lecong] Inventory in Lecong Continued to Build Up Before the Holiday

This week, HRC inventory in Lecong was 58,970 mt, up 25,500 mt WoW (+4.32%), with a lunar YoY increase of 92,400 mt (+15.67%).

l  [Zhangjiagang] Inventory in Zhangjiagang Maintained a Declining Trend in the Second Week Before the Holiday

This week, HRC inventory in Zhangjiagang was 416,000 mt, down 39,000 mt WoW (-8.57%), with a Gregorian YoY decline of 13.87% and a lunar YoY decline of 8.77%.  

l  [Tangshan] HRC Inventory in Tangshan Accumulated This Week

This week, HRC inventory in Tangshan was 413,600 mt, up 2,800 mt WoW (+0.68%), with a YoY decline of 396,400 mt (-48.94%).

As the steel mill maintenance cycle ended, HRC production continued to increase. Futures rebounded strongly this week, coupled with some pent-up demand from last week. This week marked the final week for end-use procurement, with significantly increased enthusiasm. Overall, social inventory saw a slight destocking. Looking ahead, with few new maintenance plans in the short term, HRC supply pressure remains high. As the year-end approaches, most manufacturing end-users are nearing their holiday period. It is expected that national social inventory may accumulate in the coming weeks. Overall, end-use demand before the year-end has been moderate, without a smooth accumulation trend.