Production curbs slow hot-rolled coil inventory growth

SHANGHAI, Jul 26 (SMM) – Hot-rolled coil inventories across social and in-plant warehouses in China continued to grow this week, showed an SMM survey, but by a smaller margin as deepened production cuts in Tangshan lowered inventories at mills.

Stocks rose for a ninth straight week in the week ended Thursday July 25, inching up 0.5% from a week ago to stand at 3.42 million mt, up 8.1% year on year, showed SMM data.

HRC inventories across steelmakers, however, declined 2.1% week on week and 4.4% year on year to 974,100 mt, as Tangshan further intensified its smog-control efforts this week, after a ramp-up at the end of June.

As demand remains poor in a low season, social inventories of HRC extended their increases this week, rising 1.5% from a week ago and 14% from a year ago to 2.44 million mt.

HRC fundamentals are expected to improve in August, as production curbs in Tangshan will remain strict ahead of the 70th anniversary of the founding of the country and as demand will recover in anticipation of a high production season for automobiles and home appliances after September.

This, together with robust costs, is likely to bolster prices.