China HRC inventory rose 4,900 mt on week

SHANGHAI, Jul 9 (SMM) — SMM data showed that HRC stocks across social warehouses and steel makers rose 4,900 mt or 0.12% on the week, an increase of 8.45% than a year ago, to 3.94 million mt in the week ended July 8.

The work resumption in north China and the strong HRC spot prices have driven a substantial rebound in transactions, and the growth of total HRC inventories has further slowed this week.

Inventories across social warehouses increased 31,500 mt or 1.1% week on week to 2.90 million mt. This was 11.51% higher than the same period last year.

The increase in social inventories of HRC further slowed down as rising prices drove up the spot transactions, and the steel transportation in north regions was stagnated affected by the 100th anniversary of the founding of CPC.

Stocks at Chinese steel makers came in at 1.04 million mt, down 26,700 mt or 2.5% week on week, but up 0.73% year on year.

About 4-5 large scale hot rolling steel mills reduced production amid maintenance and policies this week, so the overall output failed to increase despite the production resumption in Tangshan.

At the same time, steel mills actively shipped goods after the transportation was recovered, and the in-plant inventories fell. Inventory pressure of HRC was markedly relieved with lower supply and higher demand.

On the inventory side, HRC output is expected to further decline in July, as more steel mills have received the notice of production cut. The demand has been released to a certain extent this week amid the end users’ restocking and rising HRC prices, but lacks continuity.

The increase in HRC inventories is expected to ease further with the reduced supply in July, and the bottom support for the prices is becoming firm. However, the game between the expectations and reality continues, and the HRC prices are likely to have limited room for both rise and fall.