China HRC inventories continued their declines this week

SHANGHAI, Nov 19 (SMM)—Inventories of hot-rolled coils of steel sheets used to produce home appliances and cars in China continued to shrink this week, but the decline slowed slightly compared with the prior week as some steel makers recovered from maintenance.

SMM data showed that HRC stocks across social warehouses and steel makers fell 109,800 mt or 3.08% on the week, but remained 32.93% higher than a year ago, to 3.45 million mt in the week ended November 19, after a 4.5% loss in the previous week.

Inventories across social warehouses dropped 138,400 mt or 5.41% week on week to 2.42 million mt. This was 37.01% higher than the same period last year. Robust trades in the spot market contributed to the drop in HRC social inventories this week. But SMM learned that large amounts of steel products from northern steel makers will gradually arrive at ports in east China, which will slightly increase inventory pressure in the region.

Stocks at Chinese steel makers came in at 1.03 million mt, up 2.87% week on week and 24.23% year on year. Output increased on the week as some steel mills recovered from maintenance this week.

Spot HRC prices are now firm amid stable supply and strong demand, but may not continue to rise significantly in the near term. As the weather becomes colder in north China, local steel makers have started to increase shipments of steel products to markets in east and south China which are likely to see significant rises in HRC supply next week.