Improved demand lowers hot-rolled coil inventories

SHANGHAI, Dec 7 (SMM) – Hot-rolled coil (HRC) inventories across social and in-plant warehouses in China fell 136,000 mt, or 4.3%, from a week ago to stand at 3 million mt as of Thursday December 6, SMM data showed.

On a year-on-year basis, the inventory figure grew 7.4%, smaller than the 10.5% increase in the previous week.

For the week ended December 6, HRC social stocks decreased by 99,000 mt, or 4.6%, to 2.03 million mt, standing 4.3% higher than a year ago. With traders’ efforts to offload their cargoes and reduce purchases, the social inventory figure has fallen for six consecutive weeks, extending the distance away from the 2018 average of 2.27 million mt. Improved demand also helped lower the inventories.

In addition, invisible stocks—cargoes that are en route or wait to enter warehouses increased this week as inclement weather triggered congestion at some ports.

HRC stocks across steelmakers declined for a second straight week to stand at 974,200 mt as of Thursday December 6, down 37,000 mt, or 3.6% on the week but up 14.4% on the year. Mills kept high output amid less strict winter production curbs. Steel winter stockpiling has yet to begin and most traders plan to cut their 2019 procurement, which vexes steelmakers.