China HRC inventories may halt declines due to rising output

SHANGHAI, Apr 30 (SMM)—China HRC stocks across social warehouses and steel makers fell further slower this week as production across steel makers continued to improve.

SMM data showed that HRC stocks shrank 14,600 mt or 0.43% from the previous week and 35.7% from a year earlier to 3.38 million mt in the week ended April 29.

Inventories across social warehouses declined 33,100 mt or 1.33% week on week to 2.45 million mt. This was 36.72% lower than the same period last year. Demand weakened slightly this week as HRC prices extended gains, which led to the narrower decline in social inventories.

Stocks at Chinese steel makers came in at 925,700 mt, up 18,400 mt or 2.03% week on week, but down 32.86% year on year. In-plant inventories rebounded this week due to further rising output.

HRC supply continued to increase, while demand only improved moderately even against a backdrop of pre-holiday restocking. Decent profits encouraged steel makers to step up production as much as possible before the implementation of regional production restrictions. Supply is likely to continue to climb in the future.

China HRC inventories are expected to pile up in the next 1-2 weeks as steel mills will operate normally during the Labour Day holiday while end users will halt procurements.