SHANGHAI, Jun 25 (SMM) — SMM data showed that HRC stocks across social warehouses and steel makers rose 125,100 mt or 3.35% on the week, an increase of 3.95% than a year ago, to 3.86 million mt in the week ended June 24. HRC stocks kept rising for the fifth consecutive week amid high supply and weakened demand.
Inventories across social warehouses increased 104,600 mt or 3.88% week on week to 2.8 million mt. This was 3.19% higher than the same period last year. HRC futures fluctuated downward, and spot trade was sluggish in the off-peak season.
Stocks at Chinese steel makers came in at 1.06 million mt, up 20,500 mt or 1.98% week on week and 6% year on year. The inventory pressure at steel plants increased as steel mills maintained high production, while orders declined. In the short term, the steel mills in north China will reduce or suspend production due to the approaching 100th anniversary of the founding of CPC, and the supply pressure is expected to ease.
Domestic HRC inventories started to increase earilier on a yearly basis, and the stocks in social warehouses and plants were higher than that in the same period last year in the weak supply and demand. According to SMM survey, there will be 3-4 new hot rolling production lines put into operation within this year, and the output increase will be reflected in Q3 2021. Among the end industries, only the shipping industry saw higher prosperity, with other sectors staying flat. HRC inventories are expected to keep rising for a long period amid unbalanced supply and demand, and the prices may be dragged down.