SHANGHAI, Aug 24 (SMM) – Declining output and spot purchases lowered in-plant and social warehouse inventories of hot-rolled coil (HRC) as of Thursday August 23, from a week ago, SMM research found. Stocks remained higher than the same period last year.
HRC inventories at mills shrank 0.4% over the week to 984,900 mt, but grew 15.5% on a yearly basis. Mills cut output of HRC and raised rebar output to chase higher profit margins. As of Thursday, margins for HRC came in at 1,078 yuan/mt with iron ore priced at $65.51/mt, compared to a margin of 1,082 yuan/mt for rebar.
Liuzhou Iron & Steel in the Guangxi Zhuang Autonomous Region put its HRC production line under maintenance for some 10 days, starting from Tuesday August 21. This will affect an estimated daily output of HRC by 8,000 mt. The company will redirect molten iron to produce rebar or wire rods for construction.
Hunan steelmaker, Lianyuan Iron & Steel, also scaled down supplies of HRC and shifted production to steel products for construction.
Across social warehouses, HRC stocks decreased 0.8% over the week with brisk purchases and fewer arrivals. The figure came in at 2.22 million mt as of Thursday, 2.7% higher than the same period last year.
Market talk suggested that winter production cuts in Tangshan, Hebei province and Anyang, Henan province are likely to begin next month, and this fuelled purchasing enthusiasm across buyers.
Overall stocks, including social and in-plant volumes, declined 0.7% from a week earlier to 3.21 million mt as of August 23. This is up 6.4% from the same period last year.
