SHANGHAI, Apr 13 (SMM) – The consecutive decline in China’s overall hot-rolled inventories supported the spot prices this week, SMM learned as of Thursday April 12. However, as inventories saw mixed levels in different areas, there were no significant price spreads between north and south China.
Steel prices in south China are typically higher than those in the north as more mills are located in north China and transportation costs are higher in the south.
Overall hot-rolled inventories as of Thursday April 12, including social inventories and inventories at mills, fell 3.9% from a week ago and down 16.6% from a year ago, SMM research found. The overall inventory has fallen for six consecutive weeks.
Social inventory as of April 12 continued to see a wide decline of 4.5% from a week earlier and of 19.9% from a year earlier. It has fallen for five consecutive weeks.
Shortage of some specifications of steel extended further in east China. This supported the spot prices there to stay firm. Meanwhile, inventory declined slower in south China as port congestion continues. Under pressure from high inventories, spot prices in Lecong dipped among the major markets.
Inventories at mills as of April 12 fell for seven consecutive weeks, down 2.1% from a week ago. Steel mills were keen to cash in due to healthy profit margins. According to SMM’s calculation, mills are reaping profits over 1,000 yuan/mt for hot-rolled products, based on an iron ore price of $64.2/mt.
Spot prices in China’s major markets saw mixed trading on April 12, with trading activity turning relatively brisk in the afternoon due to rising futures prices. Buyers in the Shanghai market were cautious as prices increased, while sellers in Lecong were reluctant to release cargoes at lower levels on cost concerns. Trading was also spurred by traders taking profits on the price spreads between different markets.
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