Market pessimism lower social, in-plant inventories of hot-rolled coil

SHANGHAI, Nov 30 (SMM) – Hot-rolled coil (HRC) inventories across social and in-plant warehouses in China declined this week as pessimistic steelmakers and traders were keen to offload cargoes.

As of Thursday November 29, HRC social stocks came in at 2.12 million mt, down 32,000 mt or 1.5% from a week ago but up 7.6% from a year ago, SMM data showed. Traders lowered offers to offload cargoes and this lowered inventories below the 2018 average of 2.27 million mt, after they fell for five consecutive weeks.

HRC stocks across steelmakers lost 21,000 mt, or 2.1%, over the week ended November 29 to stand at 1.01 million mt. Compared to a year earlier, the figure stood 17.3% higher as more lenient winter production curbs and new production lines boosted output. Smaller price spreads with rebar deterred mills from turning to rebar production.

Potential profits across HRC producers were 166 yuan/mt less than that for rebar as of November 29, compared to a gap of 656 yuan/mt on November 9, SMM calculations showed.

Rebar, used in construction, is expected to face greater downside pressure in demand in winter, which also prompted steel mills to produce HRC rather than rebar.

Overall HRC inventories across China, including social and in-plant volumes, stood at 3.14 million mt as of November 29, down 1.7% week on week but up 10.5% year on year.