Hot-rolled coil inventories continue to grow despite deepened production curbs

SHANGHAI, Jun 28 (SMM) – Hot-rolled coil inventories across social and in-plant warehouses in China rose for a fifth straight week this week, showed an SMM survey, as production expanded after prices jumped on news of stricter curbs in Tangshan and mills recovered from maintenance.

Overall HRC stocks gained 1.5% from a week ago and 2.9% from a year ago to stand at 3.19 million mt as of Thursday June 27.

For the same week, stocks across steel mills inched up 0.8% to 912,800 mt, some 9.7% lower than the same period last year.

China’s top steelmaking city of Tangshan tightened its production curbs over steel mills across the region from this week, which boosted spot prices and drove mills who are not affected by the curbs to step up production.

A recovery from maintenance also accounted for the higher inventories. Taishan steel resumed its hot rolling line on June 19, while Cangzhou Zhongtie and Shagang reopened on June 25 and 27, respectively.

This week’s increase in in-plant HRC inventories was smaller than a 2% expansion seen in the week ended June 20, as mills saw greater shipments after higher prices of futures boosted speculative demand.

This, together with weak actual demand, resulted in an increase of 1.8% in social inventories this week, which rose for five weeks in a row to stand at 2.27 million mt, up 8.9% year on year.

Social warehouses are expected to continue to see the arrival of deliveries under long-term contracts next week, which will further boost social inventories.