SHANGHAI, Nov 26 (SMM) - SMM data showed that HRC stocks across social warehouses and steel makers fell 50,200 mt or 1.53% on the week, a decrease of 3.04% than a year ago, to 3.22 million mt in the week ended November 25.

The inventories of HRC fell more significantly this week, mainly due to the sharp decline in supply. The HRC output dropped across the country. XY Steel in east China and PG rolling line in south-west China started maintenance, and the production in north China was unstable due to environmental protection and heating season in winter. On the demand side, the end users purchased cautiously on demand. The inventory dropped more slowly in Zhangjiagang and Shanghai. The demand was lower than the same period last year.

The inventory across social warehouses decreased 43,300 mt or 1.83% week on week to 2.32 million mt. This was 0.66% higher than the same period last year.

The decline in social inventory expanded slightly this week. However, east China saw significantly narrowed decline.

The stocks at Chinese steel makers came in at 899,200 million mt, down 6,900 mt or 0.76% week on week and 11.44% year on year.

The in-plant stocks stopped increasing and started to fall this week. The inventories increased in south and north China, where a large proportion of HRC products were stocks, but the increase slowed down significantly. The in-plant inventory in east China fell slightly. The HRC output fell sharply in north and south China, and some traders in south China lacked goods after the previous stocks were consumed. Some traders slightly increased purchase, and the in-plant inventory were transferred to the social warehouses more rapidly.

The apparent demand of HRC weakened significantly, and the transactions were muted on the week in many regions. The inventories will drop slowly if the supply does not increase significantly.

However, the output in major steel mills may rebound after the goals of output reduction of crude steel are achieved. If the demand doest not improve, the inventories may not decrease further.