HRC social inventories fell much slower as rising prices sidelined buyers, arrivals recovered

SHANGHAI, Nov 29 (SMM) – Social inventories of hot-rolled coil (HRC) in China trended lower for a seventh straight week this week, albeit by a much smaller margin as buyers turned more cautious on rising prices and as arrivals increased after most ports fully recovered.

SMM data showed that stocks of HRC across social warehouses decreased 1.8% from a week ago to 1.74 million mt as of Thursday November 28, compared with a drop of 4.7% in the previous week.

HRC social inventories are likely to fall further slower next week, in anticipation of the arrival of the cargoes that had been stranded at ports.

Stocks across steelmakers, however, dropped 4.8% this week to 787,800 mt, larger than the decline of 2% in the prior week, as mills resumed the delivery of orders after ports recovered operations.

Overall HRC stocks across social warehouses and steel mills in China came in at 2.52 million mt as of November 28, down 2.7% from a week ago and 19.5% from a year ago.

Spot HRC prices in south China are likely to face strong downward pressure, in anticipation of supply increase.

Southern markets are the major markets for Guangxi Shenglong Metallurgy, who put a 1,780-mm hot-rolled coil production line with annual capacity of 4 million mt into operation on November 27.

About 30,000-50,000 mt of coils produced by South Korea’s Pohang Iron and Steel arrived in China recently, and most of which entered southern markets.