China HRC inventories unlikely to fall in the short term

SHANGHAI, Aug 14 (SMM) — Inventories of hot-rolled coils and plates across social warehouses and steelmakers, which are used in automobiles and home appliances, held largely unchanged on week, standing at 3.93 million mt in the week ended August 14, up 0.01% on week and 14.29% on year, showed SMM data.  

HRC social inventories halted its six-week buildup and started to fall this week. Steelmakers in north China significantly increased HRC shipments to the south, but these cargoes are still in transit. In addition, improved end-user demand also helped deplete social inventories.

SMM data showed that HRC stocks across social warehouses stood at 2.76 million mt this week, down 1.58% from the prior week, but up 12.08% from a year ago.

HRC stocks across steelmakers expanded this week as some mills restarted production after maintenance and some switched from other products to HRC production. In addition, sales weakened this week as many traders had restocked last week when spot and futures HRC prices surged.

In-plant HRC inventories increased 3.97% week on week and 19.87% year on year to 1.17 million mt in the week ended August 14, showed SMM data.

HRC inventories are not likely to decline in the short term as steelmakers will continue to ramp up production because of decent profits, while demand may weaken as some end-users will take the high-temperature holiday. Those cargoes which currently are still in transit will be shipped to social warehouses next week.