Inventories of hot-rolled coils of steel sheets used to produce home appliances and cars in China fell for a second straight this week, as mills conducted maintenance or shifted to rebar production.



SMM data showed that HRC stocks across social warehous

Data: SHFE, DCE market movement (Mar 26)

SHANGHAI, Mar 26 (SMM) &ndash; Inventories of hot-rolled coils of steel sheets used to produce home appliances and cars in China fell for a second straight this week, as mills conducted maintenance or shifted to rebar production.

&nbsp;

SMM data showed that HRC stocks across social warehouses and steelmakers decreased 1.38% in the week ended March 26 to 5.27 million mt, 70.08% higher than the same period after the Lunar New Year holiday last year.

&nbsp;

This week&rsquo;s week-over-week decline was smaller than a 2.28% decline <a href="https://news.metal.com/newscontent/101045483/China-HRC-inventories-declined-for-1st-time-since-the-Lunar-New-Year-holiday" target="_blank">last week</a>, the first weekly decline since the Lunar New Year holiday, as stocks at social warehouses inched up.

&nbsp;

HRC social inventories in China edged up 0.03% this week to 4.06 million mt, after a 1.67% decline in the prior week, as the imposition of measures to contain the fast-spreading COVID-19 pandemic outside China dampens demand outlook, roiling futures market and sidelining buyers in the physical market.

&nbsp;

Increased deliveries of cargoes that had been stranded at ports to social warehouses also helped stem a downtrend in HRC social inventories.

&nbsp;

HRC stocks at Chinese steelmakers fell for a fifth straight week this week, decreasing 4.98% to 1.52 million mt, larger than a decline of 3.79% in the previous week.

&nbsp;

Some mills scaled back production of HRC and increased production of construction steel rebar, as SMM calculations showed that profits on rebar are about 200 yuan/mt higher than those on HRC.

&nbsp;

With external demand subdued by the coronavirus, April orders from end-users received by Chinese steelmakers appear pessimistic, which is likely to force mills to pour more cargoes in the domestic markets, weighing on spot HRC prices in China.