SHANGHAI, Jul 12 (SMM) – Hot-rolled coil inventories across social and in-plant warehouses in China grew faster this week, showed an SMM survey, as a production shift from cold-rolled products and recovery from maintenance bolstered supply and as the end-market demand remained sluggish.
Stocks rose for a seventh straight week in the week ended Thursday July 11, expanding 3.9% from a week ago to stand at 3.35 million mt, up 6.9% year on year, showed SMM data. Stocks gained 1.2% in the week ended July 4.
Thin profits, or even losses, prompted steelmakers to slash cold-rolling production and step up HRC output.
Some mills resumed earlier this month after maintenance, with Ningbo Steel on July 2, Cangzhou Zhongtie on July 3 and Shougang Qian’an on July 6.
Those factors, together with slower shipments from heavy rainfall, bolstered HRC stocks across steelmakers by 6.8% this week, to 965,000 mt. This was some 7.7% lower than a year ago.
Such stocks levels did not spark concerns among steelmakers, as they believe that the pressure will ease after deliveries recover.
Social inventories of HRC continued to grow this week, rising 2.7% from a week ago and 14.2% from a year ago to stand at 2.38 million mt, driven by continued weakness in demand and the arrival of deliveries under long-term contracts.
Steelmakers in Tangshan, including Shougang, Tianzhu and Wenfeng, will be allowed to recover output from anti-smog controls in the second half of July, which is likely to further grow supply and weigh on spot prices.