SHANGHAI, Dec 26 (SMM) – Major Chinese steelmakers are expected to see 200,000 mt of their hot-rolled coil (HRC) deliveries arriving at Shanghai, Lecong and Tianjin, three major Chinese markets this week, up 33,000 mt from last week, showed an SMM survey.

This would mark a second straight week of increases in HRC arrivals, growing the risks of a price pullback in southern trading hubs of Shanghai and Lecong, where see wide price spreads against the northern market.   

Limited port and road transport capacity, however, has left plenty of cargoes stranded at ports, slowing the deliveries to warehouses and deterring inventories from growing significantly.

Shanghai

About 79,000 mt of deliveries from major steel mills are expected to arrive at Shanghai in the week ended December 29. This is up 21,000 mt week on week, after a 25,000 mt increase in the last week, as higher prices in this market and wider premiums over the north encourage mills such as Anshan Steel and Yanshan Steel, to pour their cargoes there. Shanghai HRC spot prices now stand 180-300 yuan/mt higher than the northern market, according to SMM assessments.

Shanghai HRC prices are likely to remain firm, and even to see moderate upside in the short term, as nearly half of the arrivals have been ordered and given the slow delivery pace from ports to market warehouses. It now takes 10-15 days for northern mills’ cargoes to move from Shanghai ports to social warehouses.

Lecong

Lecong is expected to see 105,000 mt of HRC deliveries from major steel mills arriving this week, up 9,000 mt from last week. This will mark a fifth consecutive week of gains in HRC arrivals at Lecong, where prices are high. However, HRC inventories in Lecong failed to rise sharply from previous lows as limited berths and shuttle vessels slowed the deliveries from ports to social warehouses.

It now takes 3-4 days for vessels to berth, compared to 2 days as usual, while some vessels still stranded at ports wait for shuttle transportation. Those stranded cargoes are a big threat to prices in Lecong, which have prompted some traders to lower their quotes to discharge cargoes.

Tianjin

About 16,000 mt of deliveries from major steel mills are expected to arrive at Tianjin this week, up 3,000 mt from the prior week, which will help ease shortages of some certain products.