HRC social inventories rose for 1st time in 12 weeks

SHANGHAI, Jan 3 (SMM) – Inventories of hot-rolled coil (HRC) in China rose this week for a second straight week, as stocks at social warehouses jumped on greater arrivals and weaker demand.

SMM data showed that stocks of HRC across social warehouses and steelmakers in China increased 2.2% to 2.46 million mt in the week ended January 2, after an increase of 2% in the previous week. This was 14.3% lower than a year ago.

Stocks at social warehouses accounted for 1.63 million mt, down 14.2% from a year ago but up 4.6% from a week ago, marking the first weekly increase in 12 weeks.

Deliveries to social warehouses picked up this week after port capacity constraints eased, while downstream consumers held back from purchasing given the approaching Lunar New Year holiday.

For the same week, HRC inventories at steelmakers declined 2.1% to 831,300 mt, after a jump of 6.4% in the prior week. In-plant stocks failed to continue to grow as some mills faced environmental restrictions and as mills stepped up shipments to clear inventories ahead of the holiday.

The Hebei-based Cangzhou Zhongtie was required to suspend all its sintering machines, and it suspended its rolling lines as well for maintenance, which affected about 100,000-120,000 mt of HRC production.

SMM learned that Shagang, Tangshan Iron and Steel, Handan Iron and Steel and Anyang Iron and Steel plan to increase their HRC production in January, by a combined volume of 260,000 mt.

Zhongtie and Benxi Iron and Steel, meanwhile, plan to trim output by a total of 180,000 mt.

An increase in production and potential restocking by traders are set to grow supply pressure and weigh on spot prices.