China HRC inventories extended decline on strong demand recovery

SHANGHAI, Apr 23 (SMM) – Inventories of hot-rolled coils of steel sheets used to produce home appliances and cars in China fell for a sixth straight week this week, propelled by a strong demand recovery amid Beijing’s stimulus efforts.  

SMM data showed that HRC stocks across social warehouses and steelmakers decreased 4.91% in the week ended April 23 to 4.77 million mt, larger than a 4.56% fall in the previous week.

The stocks were 61.19% higher than the same period last year, smaller than an annual increase of 67.98% seen a week earlier.

This week, social inventories fell 5.31% to 3.52 million mt, while stocks at steel mills declined 3.77% to 1.25 million mt.

Among major HRC consumers, machinery was the stellar sector, according to the SMM survey. Data from China’s National Bureau of Statistics showed that the country’s March production of excavators, large and mid-sized tractors and industrial robots was 2.3%, 36.6%, 3% and 12.9%, respectively, higher than the same month of 2019.

With falling inventories offering support, spot prices for HRC in China, which have reached the break-even point for steel producers and traders, are unlikely to stage a sharp decline in the short term. The pandemic’s shock to the export sector and supply increase boosted by recovery from maintenance and switches from cold-rolled steel, however, will limit upside potential in spot HRC prices.