SHANGHAI, Nov 1 (SMM) – Inventories of hot-rolled coil (HRC) in China trended lower for a third straight week, albeit by a smaller margin as some steelmakers recovered from maintenance.
SMM data showed that stocks of HRC across social warehouses and steel mills decreased by 2.6% from a week ago to 2.99 million mt as of Thursday October 31, after a 6.9% decline in the previous week.
On a yearly basis, stocks declined for a fourth week in a row and saw a drop of 10.9% as of October 31.
Production recovery from maintenance bolstered HRC inventories across Chinese steelmakers by 1% this week to 909,600 mt, after two consecutive weeks of declines.
About 35,000 mt of daily production resumed after maintenance at Anshan Steel, Wuhan Steel and Anyang Steel ended at the start of this week.
Weaker orders from traders also contributed to higher inventories at steelmakers, as miserable mood seeping through the market kept traders cautious about procurement.
Meanwhile, HRC social inventories continued to fall, shedding 4.1% from a week earlier to 2.08 million mt, as trades picked up amid stable spot prices while market sentiment improved on the recent rally in prices of futures.
The decline in social inventories was limited by greater arrivals, as cargo freight slightly recovered weeks after various regions intensified curbs on road transport on the back of the fatal highway bridge collapse in Wuxi.
Notably, inventory pressure may be greater than it appears, as cargoes remained stranded at ports with the crackdown on overloaded trucks continuing.
The ramp-up of newly-commissioned capacity will also add to inventory pressure, especially in south China.
Shenglong Metallurgy in Fangchenggang, Guangxi Zhuang autonomous region in south China, has put its 1,780-mm hot rolling line into operation, and will pour most of its products into the southern markets.
The southern markets, meanwhile, will see inflows of seaborne materials and resources from the north, which is set to weigh on spot prices across the regions.