China HRC inventories 57% higher than a lunar year ago

SHANGHAI, Mar 6 (SMM) – Inventories of hot-rolled coils of steel sheets used to produce home appliances and cars in China have kept refreshing their record highs as the COVID-19 epidemic outbreak delayed demand.

SMM data showed that HRC stocks across social warehouses and steelmakers stood at 5.73 million mt as of Thursday March 5, some 57.3% higher than the same period after the Lunar New Year holiday last year.

On a week-on-week basis, the stocks increased 3.3% this week, smaller than a 5% gain in the previous week. The weekly gains in the stocks have narrowed for three consecutive weeks.

SMM does not expect HRC stocks in China to peak until at least late April, given the current pace of growth. With cargoes moving from mills to social warehouses, mounting inventory pressure is set to keep China spot HRC prices subdued this month.   

Social inventories of HRC were at 3.89 million mt as of Thursday, up 6.4% from a week ago and 48.2% from a lunar year ago. Actual social inventory pressure seems to be greater as cargoes are deterred from moving from ports or vessels to social warehouses as warehouses are running out of storage capacity.

HRC inventories at steelmakers, however, fell for a second straight week this week, decreasing 2.8% to 1.84 million mt, standing 81% higher than the same period after the Lunar New Year holiday last year. Logistics recovery helped ease inventory pressure at mills, but the inventories failed to decline swiftly as port congestion slowed the return of vessels.