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SHANGHAI, Jul 24 (SMM) – Inventories of hot-rolled coil (HRC), the main steel products used by manufacturers, continued to trend higher this week, as high prices sidelined buyers while heavy rains and floods in some regions deterred deliveries from leaving or entering warehouses.

SMM data showed that HRC stocks across social warehouses and steelmakers increased 2.3% in the week ended July 23 to 3.86 million mt, smaller than a 3.72% gain in the previous week. The stocks have risen for five consecutive weeks and were 12.78% higher than the same period last year.

Shanghai HRC futures extended their rally this week, with the most actively traded contract hitting a one-year peak of 3,844 yuan/mt on Thursday, and spot prices followed higher.

HRC social inventories rose 1.23% this week to 2.72 million mt, marking a fourth straight week of gains, while stocks at steel mills climbed for a second straight week, increasing 4.96% to 1.14 million mt.

An increase in production also contributed to higher inventories at mills as rising profits lifted production enthusiasm among mills.

Recent increases in HRC inventories were not significant or swift enough to jitter mills or traders, as the macro environment remained positive. HRC spot prices are expected to continue to rise in the short term.