SHANGHAI, Dec 21 (SMM) – Hot-rolled coil (HRC) inventories across social warehouses and steelmakers in China decreased by 42,000 mt, or 1.5% over the week ended Thursday December 20 and came in at 2.795 million mt, up 4.4% from a year earlier, SMM data showed.

Social stocks of HRC declined 57,000 mt, or 2.9% for the same week, marking an eighth straight weekly drop, which is likely to provide support to prices.

Social inventories stood at 1.887 million mt as of December 20, up 1.1% year on year.

For the same week, in-plant stocks of HRC increased by 15,000 mt, or 1.7% to 908,500 mt, standing 11.9% higher than the same period last year. 

Falling demand across end-users in the north and slower shipments caused by port congestion and rigorous checks, lifted HRC stocks at steel mills.

The decline in overall stocks is set to support HRC prices. Strict implementation of winter curbs in Tangshan and continued port congestion are expected to weigh on production and lower arrivals at physical markets in the short term. This accounts for the recent rebound in HRC prices.

SMM believes that HRC prices are likely to weaken in the longer term.