China HRC inventories extended decline; in-plant stocks rebounded

SHANGHAI, May 15 (SMM) – Inventories of hot-rolled coils of steel sheets used to produce home appliances and cars in China this week extended their decline on robust demand, but stocks at steelmakers rebounded as a slew of mills recovered production from maintenance.

SMM data showed that HRC stocks across social warehouses and steelmakers decreased 4.17% in the week ended May 14 to 4.26 million mt, marking the ninth straight weekly decline.

The stocks were 41.47% higher than the same period last year, smaller than an annual increase of 45.99% seen a week earlier.

This week, social inventories fell 5.98% to 3.06 million mt, while stocks at steel mills inched up 0.77% to 1.2 million mt.

Mills including Ansteel and Shougang recovered production from maintenance this week, and that, combined with the switch from cold-rolled products, boosted HRC production and lifted inventories across steelmakers.

In the trading market, trades, especially in north and south China, remained brisk, as manufacturers of tubes/pipes and structural parts stockpiled actively.

Falling inventories and recovering demand in China as well as a potential revival in the export sector following the easing of coronavirus lockdown restrictions beyond China, are bolstering HRC prices.

The most active HRC contract on the Shanghai Futures Exchange for October delivery notched a two-month peak of 3,382 yuan/mt on Friday morning, and is on track for the third consecutive weekly gain.