SMM Social Inventory Update: Supply Surge & Weak Demand Narrow Decline Rate

【SMM Social Inventory Overview】Supply Increase & Weak Demand, Social Inventory Decline Continues to Narrow

This week, the SMM survey of 86 warehouses nationwide (large sample) showed HRC social inventory at 4.0305 million mt, down 51,300 mt WoW, a decrease of 1.26% WoW, and down 7.79% YoY. The national social inventory continued to decline this week, with the rate of decline further narrowing. By region, except for a slight inventory buildup in the north-east China market, the east China, north China, central China, and south China markets all continued destocking, with the north China market showing a larger decline.

The impact of steel mill maintenance significantly decreased, leading to a substantial increase in HRC supply. Futures initially fell but later rebounded, coupled with the Qingming Festival holiday, resulting in poor market sentiment and a continued narrowing of the social inventory decline. Looking ahead, according to the SMM survey, daily HRC production in April increased by 5.6% MoM, and supply pressure is expected to continue to rebound. The disturbance from tariff trade wars has intensified, and current market sentiment has slightly improved, awaiting the introduction of macro support policies. Next week's apparent demand may be stronger than this week, and short-term national social inventory is expected to continue destocking.