SHANGHAI, Nov 2 (SMM) – While hot-rolled coil (HRC) inventories across Chinese social warehouses dipped for the first time in seven weeks and stocks at steelmakers fell for a fourth straight week, the overall stocks as of Thursday November 1 stood 8.8% higher compared to a year ago, suggesting continued weak fundamentals of HRC across Chinese markets.

SMM data showed that HRC inventories across social warehouses and steelmakers decreased 34,000 mt, or 1%, over the week ended November 1 to stand at 3.36 million mt. The year-over-year expansion came in at 8.8%, larger than 8.1% in the previous week.

For the same week, social inventories dipped 15,000 mt, or 0.6%, to 2.44 million mt, up 10.8% from a year earlier. Social stocks had increased for six consecutive weeks.

In-plant stocks came in at 920,700 mt as of November 1, down 19,000 mt, or 2% as shrinking profit margins drove steelmakers to cut their HRC output. In-plant stocks, however, stood 3.9 higher compared to a year ago amid lenient production curbs.

Profits that HRC with iron ore as feedstock can bring to steelmakers started to shrink from mid-October, down some 324 yuan/mt over the past fortnight, SMM calculations showed. As of November 1, the margins stood at 498.1 yuan/mt with iron ore at $77.07/mt while margins came in at 1,044 yuan/mt for rebar and 722.9 yuan/mt for billet.