SMM HRC Social Inventory Drops Further Despite Marginal Supply Increase

【SMM HRC Social Inventory Overview】Limited Supply Increase, Social Inventory Decline Continues to Expand

This week, SMM's national 86-warehouse (large sample) HRC social inventory stood at 3.6052 million mt, down 229,500 mt MoM, a decrease of 5.98% MoM, and down 13.79% YoY. The national social inventory continued to decline this week, with the rate of decrease expanding. By region, the declines in north China, south China, and east China were greater than those in central China and north-east China.

The impact of steel mill maintenance decreased, leading to a slight increase in HRC supply. Futures initially fell but later rose, improving market sentiment during the price increase period. End-users showed strong enthusiasm for purchasing at low prices, resulting in a continued significant decline in social inventory. Looking ahead, in the short term, there are still few new maintenance activities at steel mills, and supply pressure remains high with fluctuations. Next week coincides with the restocking period before the Labour Day holiday, which is relatively long. Additionally, the upcoming macro Politburo meeting is expected to improve market sentiment, potentially leading to a release of end-user restocking. It is anticipated that the national social inventory will continue to decrease in the short term.