China HRC inventories extended decline as demand improved in a rising market

SHANGHAI, Jun 5 (SMM) – Inventories of hot-rolled coils of steel sheets used to produce home appliances and cars in China continued to trend lower this week, as demand improved after prices jumped earlier in the week.

SMM data showed that HRC stocks across social warehouses and steelmakers decreased 4.81% in the week ended June 4 to 3.71 million mt, marking the 12th straight week of declines.

The stocks were 22.6% higher than the same period last year, compared to an annual increase of 30.38% seen a week earlier.

The HRC contract on the Shanghai Futures Exchange for October delivery climbed to a high of 3,597 yuan/mt on Tuesday, the highest since it became the most actively traded HRC contract on the bourse at the end of March.

The recent rally in HRC prices began in the wake of the imposition of production curbs on steel mills in the top steelmaking hub of Tangshan last week, and that encouraged traders and downstream consumers to ramp up buying in the spot market.

HRC stocks at social warehouses in China fell 3.97% this week to 2.71 million mt, compared to a 3.01% decline in the prior week.

For the same week, stocks at steel mills dropped 7.01% to 995,800 mt, slightly smaller than an 8.97% decline in the previous week as some mills recovered production from maintenance.