Less-strict production curbs, new capacity grow in-plant HRC inventories

SHANGHAI, Nov 23 (SMM) – While profit margins for Chinese steelmakers sharply narrowed in a falling market, hot-rolled coil (HRC) inventories across Chinese steelmakers expanded 8.6% over the week ended November 22 as less-strict winter production curbs and newly-added production lines kept output at highs and as demand shrank, SMM believes.

As of Thursday November 22, HRC in-plant stocks rose for a second straight week to stand at 1.03 million mt, up 23.3% from a year earlier, compared to the year-on-year increase of 13% in the previous week, SMM data showed.

For the same week, HRC inventories across social warehouses dropped 2.3%, or 51,000 mt, to stand at 2.16 million mt, up 4.3% on a yearly basis. Social stocks have decreased for four consecutive weeks, but the decline slowed as colder weather shrank demand across northern areas.

In anticipation of more inflows to the market, traders lowered offers to offload cargoes. This accounted for the declines in social stocks.

Overall HRC inventories across China, including volumes at steelmakers and social warehouses, came in at 3.19 million mt as of November 22, up 1% week on week. This widened the year-on-year growth to 9.7%, reflecting that fundamentals in the Chinese HRC market continued to decline.