China HRC inventories extended decline as demand improved on macro optimism

SHANGHAI, Apr 10 (SMM) – Inventories of hot-rolled coils of steel sheets used to produce home appliances and cars in China continued to decline this week, as economic stimulus efforts by central banks and hopes that the coronavirus pandemic outbreak in some countries may be starting to plateau, lifted market sentiment and sparked buying in the physical market.

SMM data showed that HRC stocks across social warehouses and steelmakers decreased 3.59% in the week ended April 9 to 5.26 million mt, marking a fourth straight week of decline and larger than a 2.2% fall in the previous week.

The stocks were 76% higher than the same period after the Lunar New Year holiday last year.

Social inventories fell 3.31% to 3.88 million mt, while stocks at steel mills declined 4.37% to 1.38 million mt.

HRC stocks at steelmakers fell slower this week, as mills trimmed production of cold-rolled products after profits on such products turned negative on poor demand.

Greater HRC output caused by cold-rolled products output curtailments and cheap imported cargoes are expected to weigh on HRC prices in China.