China HRC Inventory Up 17,900 mt on Week

SHANGHAI, Aug 20 (SMM) - SMM data showed that HRC stocks across social warehouses and steel makers rose 17,900 mt or 0.44% on the week, an increase of 3.64% than a year ago, to 4.04 million mt in the week ended August 19.

Some steel mills conducted maintenance on HRC production lines this week, and the output declined. Demand remained weak, and the overall inventory increased slightly.

Inventories across social warehouses decreased 6,200 mt or 0.2% week on week to 3.07 million mt. This was 13.31% higher than the same period last year.

The stock arrivals in some regions were delayed due to the rainfall, which to some extent relieved the pressure on social inventories.

The end purchase remains weak, and the cargoes in transportation may arrive intensively, so the HRC inventories are unlikely to further decline in the short term.

Stocks at Chinese steel makers came in at 973,000 mt, up 24,000 mt or 2.53% week on week but down 18.33% year on year.

Steel mills’ output of HRC declined this week, but the outbound in northern regions slowed down, and the in-plant stocks rebounded significantly, leading to a slight increase in the inventories across the steel mills in China.

The apparent demand fell from the previous week. Downstream companies were less willing to purchase and mostly wait-and-see amid the sharp fluctuation of steel prices.

The orders received by HRC end companies were also flat, and more companies had high-temperature holidays in mid-August, leading to the limited outbound of HRC.

HRC output may decline slightly in late August as the maintenance will increase, but the demand is unlikely to rebound in the short term. HRC prices will be more affected by news amid the weak supply and demand, and may move at lower levels in the short term.

In the medium and long term, HRC fundamentals may improve after the demand rebounds. However, steel mills are less willing to reduce HRC production, and the price rebound of HRC may be weaker than long steel.