China HRC inventories grew slower, up 0.9% week on week

SHANGHAI, Mar 13 (SMM) – Inventories of hot-rolled coils of steel sheets used to produce home appliances and cars in China continued to trend higher, hitting a new record high, as cargoes stranded at ports moved to social warehouses following logistics recovery.

SMM data showed that HRC stocks across social warehouses and steelmakers stood at 5.78 million mt as of Thursday March 12, some 65.37% higher than the same period after the Lunar New Year holiday last year.

However, positive signals are seen from weekly changes in the inventories. The stocks increased just 0.9% from a week earlier, smaller than a 3.3% gain in the previous week. The weekly gains in the stocks have narrowed for four consecutive weeks, as stocks at steel mills fell for a third straight week following the resumption of end-users.

HRC inventories at Chinese steelmakers fell 9.96% this week to 1.66 million mt, much larger than a decline of 2.77% in the previous week. Northern mills saw shipments improving on resumption of end-users, while logistics recovery allowed mills to move cargoes to ports, which also helped accelerate the decline in HRC in-plant stocks.

On the other hand, HRC inventories at social warehouses continued to grow and saw no tangible signs of a slowdown, which will deter spot prices from rising in the near term.

Social inventories increased 6.03% this week to 4.13 million mt, to produce an increase of 63.68% from the same period after the Lunar New Year festival last year. New warehouses were opened after many warehouses ran out of storage capacity, allowing cargoes stranded at ports to move to social warehouses.