China HRC inventories started to decline

SHANGHAI, Aug 21 (SMM) - Inventories of hot-rolled coils (HRC) and plates across social warehouses and steelmakers, which are used in automobiles and home appliances, stood at 3.9 million mt in the week ended August 21, down 0.86% on week and 14.23% on year, showed SMM data.  

HRC social inventories fell 1.97% this week to 2.71 million mt, marking the second consecutive week of declines. The stocks were 14.23% higher than the same period last year, compared to an annual increase of 12.08% seen a week earlier. Increased shipments from mills at eastern China and the demand of cold-rolled coils plants in some areas bolstered hot-rolled coils consumption resulting in the extended decline of inventories on week.

On the other hand, HRC Stocks at steel mills increased 1.77% week on week and 21.7% year on year to 1.19 million mt in the week ended August 21, showed SMM data. Firmer prices suppressed general carbon trades of end-users and traders, leading to in-plant HRC inventories flowing to social warehouses at a slower rate, resulting in continued increase of inventories. But the growth rate of in-plant HRC inventories slowed down compared with last week as some steel mills turned to maintenance and HRC inventories declined on week.

The decline in HRC inventories boosted market confidence to a certain extent, but from the supply side, steelmakers should still remain alert for downside risks.

SMM survey showed that many steel mills have carried out cold rolling line maintenance since the end of August, inventories of cold-rolled coils decreased and HRC inventories increased accordingly.

The production profit of HRCs and plates is considerably good, and the production of steel mills that have not been overhauled is increasing, so the supply pressure of hot-rolled coils and plates is expected to be still relatively high. 

On the demand side, the fundamentals of supply and demand still showed signs of weakening, and the spot price was correspondingly suppressed due to high prices of raw materials, hot weather and the less-than-expected supply release.