China HRC Inventory Increased 3,800 mt on Week

SHANGHAI, Dec 10 (SMM) - SMM data showed that HRC stocks across social warehouses and steel makers rose 3,800 mt or 0.12% on the week, an increase of 6.53% than a year ago, to 3.17 million mt in the week ended December 8.

The social inventory increased, while the in-plant stocks declined. The HRC output rebounded slightly. The maintenance of XG rolling line in east China and SGJT rolling line in Tanshang was ended this week, of which the output increased significantly. While some steel mills in south and central China started a new round of overhaul this week, and the output declined.

The end demand remained weak. The social inventories in south, central, north-west, and south-west China continued to rise. The HRC demand in east China was higher than most other regions, but the decline in the social inventory there narrowed significantly, due to the muted transactions under the impact of COVID-19 pandemic.

Inventories across social warehouses increased 22,000 mt or 0.96% week on week to 2.32 million mt. This was 16.47% higher than the same period last year.

The social inventory increased slightly mainly because the inventory dropped more slowly in east China, while the inventory increased in south, central, north-west, and south-west China.

The HRC prices rose slightly this week, but the end demand weakened, and most traders received fewer orders than the same period in previous years. The end users mostly refused to purchase at current prices. Some social warehouses were closed in east China due to the severe pandemic, and some sites as well as plants suspended the production. At the same time, some goods arrived at the social warehouses, causing the total social inventory to increase.

Stocks at Chinese steel makers came in at 852,100 mt, down 18,300 mt or 2.10% week on week and 13.54% year on year.

The in-plant inventories in east and south China declined. The traders saw the shortage in the stocks of HRC or certain specifications in Shanghai, Wuxi, Changzhou, Lecong, and Ningbo. As the HRC prices rebounded recently, the steel mills and traders were less panic after the continuous price drop. The steel mills increased the shipments, and the traders purchased more goods. As such, the in-plant stocks were transferred to the social warehouses.

The apparent demand of HRC fell more slowly this week, but it still stood at a low level compared with the previous years. The market saw the shortage of some specifications, and the macro news disturbed the market sentiments. The steel mills and traders in east and south China all shipped goods actively. However, the transactions were thin due to poor actual demand. The HRC supply may turn to surplus in mid to late December unless the demand recovers significantly.