HRC inventories fell for 9th week on robust demand, production restrictions

SHANGHAI, Dec 13 (SMM) – Inventories of hot-rolled coil (HRC) in China trended lower for a ninth consecutive week this week, as demand remained robust and as mills were required to curtail production to combat heavy smog.

SMM data showed that stocks of HRC across social warehouses and steelmakers in China decreased 5.5% to 2.37 million mt in the week ended December 12, much larger than a dip of 0.5% in the previous week. This was 15.1% lower than a year ago.

This week, social inventories of HRC dropped 7.3% to 1.57 million mt, due to limited arrivals and strong demand. This will remain supportive of spot HRC prices.

Stocks at steel mills, meanwhile, fell 1.6% to 806,500 mt, as the latest round of heavy smog prompted various regions to impose production curbs on steelmakers.

Spot HRC prices have been on a tear since November, improving mill profits and encouraging higher production.

An SMM survey earlier this week showed that Chinese steelmakers plan to produce 9.29 million mt of hot-rolled coils and plates in December, up 4.75% from the realised output in November. This is set to exert downward pressure on prices.