China HRC inventories extended declines this week

SHANGHAI, Nov 12 (SMM)—Inventories of hot-rolled coils of steel sheets used to produce home appliances and cars in China continued to shrink this week, and the decline expanded compared with previous weeks as HRC futures registered a new high.

SMM data showed that HRC stocks across social warehouses and steelmakers fell 167,800 mt or 4.5% from the previous week, but remained 31.88% higher than a year ago, to 3.56 million mt in the week ended November 12, after a 2.4% loss in the prior week.

Inventories across social warehouses dropped 143,500 mt or 5.31% week on week to 2.56 million mt. This was 38.08% higher than the same period last year. As ferrous metals prices have recently increased constantly, end-users stepped up purchasing. In addition, environmental restrictions in Tangshan slowed shipments to social warehouses. These led to the decline in HRC social inventories.

Stocks at Chinese steel makers came in at 999,300 mt, down 2.37% month on month, but up 18.29% year on year. Output cuts resulted from maintenance were larger than output increases, which accounted for the drop in in-plant HRC stocks this week.

An SMM survey showed that 35 steel makers in China plan to produce a total of 10.43 million mt of hot-rolled coils and plates in November, up 0.1% from the realised output in October. Large exports of home appliances and robust production in the automobile sector boosted demand for HRC, which will further lower inventories and support spot HRC prices.