Robust demand extended decline in China HRC inventories

SHANGHAI, May 7 (SMM) – Inventories of hot-rolled coils of steel sheets used to produce home appliances and cars in China fell for an eighth straight week this week, as demand remained robust.

SMM data showed that HRC stocks across social warehouses and steelmakers decreased 2.31% in the week ended May 7 to 4.45 million mt. That was smaller than a 4.6% fall in the previous week due to the Labour Day holiday and improved arrivals.

The stocks were 45.99% higher than the same period last year, smaller than an annual increase of 49.72% seen a week earlier.

This week, social inventories fell 2.77% to 3.25 million mt, while stocks at steel mills dipped 1.02% to 1.19 million mt.

The most active HRC contract on the Shanghai Futures Exchange for October delivery surged on Thursday to close near a seven-week peak of 3,305 yuan/mt, posting a four-day winning streak.

Tracking gains in futures, spot prices of HRC in China also rose sharply. SMM assessed spot HRC prices for the Lecong market at 3,425 yuan/mt on late Thursday May 7, up 120 yuan/mt from the recent low of 3,305 yuan/mt recorded on April 29.

HRC trades in east China’s spot market were very brisk after returning from the Labour Day holiday, and a trader in Zhangjiagang told SMM that the volume of orders it received in the recent two days reached a peak for this year.