Weak demand, greater supply extend increase in hot-rolled coil inventories

SHANGHAI, Jul 19 (SMM) – Hot-rolled coil inventories across social and in-plant warehouses in China continued to grow this week, showed an SMM survey, as a recovery from production curbs and thinner margins drove mills to step up output and as demand weakened in a low season.

Stocks rose for an eighth straight week in the week ended Thursday July 18, expanding 1.6% from a week ago to stand at 3.4 million mt, up 6.3% year on year, showed SMM data.

Tangshan loosened its production curbs on some mills in the second half of July, which is estimated to grow daily steel plate output by 800 mt.

Meanwhile, higher prices of raw materials, such as iron ore, coke and coking coal, squeezed margins among steelmakers, who had to ramped up operations to boost sales.

The revenue that mills can expect to get for producing hot-rolled coil currently stand at 150-200 yuan/mt, down from 1,000 yuan/mt the same period last year.

This week, HRC inventories across steel mills gained 3.1% to 995,300 mt, some 6.9% lower than a year ago. Heavy rainfall also accounted for higher in-plant stocks, as deliveries were impacted.

HRC social inventories expanded 1% week on week and 12.9% year on year to stand at 2.41 million mt as of July 18.