China HRC inventories rose for 4th week as high prices sidelined buyers

(Added charts)

SHANGHAI, Jul 17 (SMM) – Inventories of hot-rolled coil (HRC), the main steel products used by manufacturers, continued to trend higher this week, as high prices kept buyers on edge.

SMM data showed that HRC stocks across social warehouses and steelmakers increased 3.72% in the week ended July 16 to 3.77 million mt, after a 1.87% gain in the previous week. The stocks have risen for four consecutive weeks and were 10.74% higher than the same period last year.

Shanghai HRC futures extended their rally earlier this week, and spot prices followed higher. That deterred end-users from purchasing from traders or mills, lifting inventories at both social warehouses and mills.

HRC social inventories rose 3.27% this week to 2.69 million mt, marking a third straight week of gains, while stocks at steel mills climbed 4.87% to 1.08 million mt, after a 0.87% decline in the week before. The recovery from maintenance and switches from rebar also contributed to higher in-plant HRC inventories.

Despite recent gains in inventories, fundamentals for HRC remain strong given continued robustness in end-user demand and as some southern markets are still grappling with supply tightness. Firm fundamentals, coupled with positive macro environment are expected to keep HRC prices firm.