China HRC inventories extended decline by 2.7% on week

SHANGHAI, Jun 19 (SMM) – Inventories of hot-rolled coils of steel sheets used to produce home appliances and cars in China continued to trend lower this week, indicating that demand remains robust and spot prices are likely to see further upside.

SMM data showed that HRC stocks across social warehouses and steelmakers decreased 2.74% in the week ended June 18 to 3.49 million mt, marking the 14th straight week of declines.

The stocks were 11.29% higher than the same period last year, compared to an annual increase of 16.35% seen a week earlier.

HRC stocks at social warehouses fell 3.71% this week to 2.48 million mt, smaller than a 4.97% decline in the prior week due to greater deliveries from mills and weakened trades with traders and downstream users locked in a stalemate over prices.  

Heavy rainfalls in east and south China affected logistics, and that also slowed the social inventory decline.

Stocks at steel mills resumed their downtrend this week, as traders stepped up orders after mills made some concessions following weak orders last week. Production, on the other hand, grew slightly slower this week, due to less resumption from maintenance.

In-plant HRC stocks dipped 0.27% this week to 1.01 million mt, compared with a 1.77% gain in the previous week, showed SMM data.

A fresh outbreak of COVID-19 has prompted Beijing to re-impose travel curbs, which affects HRC deliveries from markets across the capital city. Some construction sites in Beijing and nearby regions have also been affected.

The Chinese Center for Disease Control and Prevention’s chief epidemiologist, Wu Zunyou, said at a news conference on Thursday June 18 that the outbreak in Beijing, which saw 21 new cases confirmed on Wednesday and 31 the day before, was now under control.