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HRC arrivals at major Chinese markets to decline but deliveries to warehouses are picking up
Jan 2, 2020 15:02CST
Source:SMM
Major steelmakers are estimated to see 170,000 mt of HRC deliveries arriving at Shanghai, Lecong and Tianjin this week

SHANGHAI, Jan 2 (SMM) – Major Chinese steelmakers are estimated to see 170,000 mt of their hot-rolled coil (HRC) deliveries arriving at Shanghai, Lecong and Tianjin, three major Chinese markets this week, down 23,000 mt from last week, showed an SMM survey.

This comes after two consecutive weeks of increases in HRC arrivals, as mills slowed their shipments or cargoes spent more time at ports waiting for departure due to limited marine vessels.

Deliveries from southern destination ports to social warehouses, meanwhile, have picked up as transport constraints eased, which will put upward pressure to social inventories and weigh on spot prices in southern markets where have been enjoying premiums over the northern markets and attracted deliveries from steelmakers.

Shanghai

About 77,000 mt of deliveries from major steel mills are expected to arrive at Shanghai in the week ended January 5. This is slightly down 2,000 mt from the prior week, as mills slowed their deliveries after stepping up shipments in the previous weeks.

HRC prices in Shanghai have been supported by shortages of some certain products, as limited port berths and truck capacity deterred arrivals at ports from being delivered to social warehouses. But deliveries to social warehouses are quickening. It used to take 10-15 days for cargoes to move from ports to social warehouses, and it now takes only about 7 days.

Faster deliveries to warehouses and faltering demand are set to lift inventories this week. HRC social inventories in Shanghai are likely to continue to grow, weighing on spot prices, in anticipation of the arrival of cargoes previously stranded at ports and shipments from steelmakers.  

Lecong

Lecong is expected to see 86,000 mt of HRC deliveries from major steel mills arriving this week, down 19,000 mt from last week. This will mark the first decline in six weeks, but still stand higher than the average weekly level of 85,000 mt for December.

Arrivals at Lecong are estimated to decline this week, as limited available vessels at ports of departure have slowed deliveries. Shenglong Metallurgical is expected to see five vessels arriving at Lecong this week, compared to its original plan of seven vessels.

Despite gains in futures prices, spot HRC prices in Lecong continued to fall this week, as bearish sentiment grew with deliveries from ports accelerating on eased shuttle vessel and unloading capacity shortages. Lecong HRC prices are likely to slip further in anticipation of more arrivals.

Tianjin

About 14,000 mt of deliveries from major steel mills are expected to arrive at Tianjin this week, down 2,000 mt from the prior week. Moderate changes to HRC arrivals at Tianjin have kept fundamentals there stable, and spot HRC prices in Tianjin have been steady since December. Prices in Tianjin are likely to remain stable, without a large price spread with Tangshan.

Inventory data
Hot-rolled coil
HRC
Steel

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