SHANGHAI, Jul 15 (SMM) - SMM data showed that HRC stocks across social warehouses and steel makers rose 47,100 mt or 1.2% on the week, an increase of 5.8% than a year ago, to 3.99 million mt in the week ended July 15.

The inventory increment expanded this week as HRC output was raised slightly. At the same time, futures and spot prices kept rising, but the end demand was overdrawn to some extent. The purchase remained flat, and the pressure to reduce stocks increased.

Inventories across social warehouses increased 48,100 mt or 1.66% week on week to 2.95 million mt. This was 9.77% higher than the same period last year.

Stocks at Chinese steel makers came in at 1.04 million mt, down 1,000 mt or 0.1% week on week and 4.4% year on year.

In-plant stocks basically stood stable this week. The resources from the northern plants were sold to southern regions, and the inventories were transferred from the plants to social warehouses more rapidly, which dragged down the overall in-plant inventory.

The implementation of production cut is the major driving force for the higher HRC prices. Whether the HRC output will decline as expected to relieve inventory pressure will have significant impact on HRC price trends.

According to SMM survey, 8 large domestic steel mills have plans to reduce or overhaul HRC production from July to August, and the output is expected to decline slightly. Weak fundamentals have limited impact on HRC prices. Strong expectations remain the major support to the trade prices in the short term.