Greater demand extends declines in HRC inventories

SHANGHAI, Aug 30 (SMM) – Social inventories of hot-rolled coil (HRC) in China declined for a third week this week, as downstream consumers stepped up purchases after the elevated US-China trade tensions and potential easing of Tangshan production curbs sidelined them earlier in the week.

SMM data showed that HRC stocks across social warehouses decreased by 1.8% from a week earlier to stand at 2.39 million mt as of Thursday August 29. Social stocks rose 9.6% from a year ago.

Orders across sectors such as construction machinery, infrastructure and tubes/pipes have improved and that bolstered demand for HRC, but users held off on procurement earlier in the week as Washington and Beijing heightened the trade tensions with a new round of tit-for-tat tariff hikes over the weekend and as a draft plan for smog-control in Tangshan in September suggested an easing in production curbs.

Spot prices stemmed their declines later in the week, spurring downstream purchases.

In-plant HRC inventories this week stemmed three consecutive weeks of gains and edged down 0.4% week on week to 975,300 mt, standing 2.9% lower than the same period last year, as improved orders lowered stocks at some mills.

Overall HRC stocks across social and in-plant warehouses in China came in at 3.37 million mt as of August 29, down 1.4% week on week but up 5.6% year on year. This pointed to improving fundamentals.