HRC Inventory Keeps Accumulating with Market Demand yet to Recover

SHANGHAI, Feb 1 (SMM) - The social inventory of hot rolled coil (HRC) stood at 989,800 mt in Lecong county, Foshan city, Guangdong province this week, up 43,600 mt or 4.61% from a week ago. The inventory was 451,700 mt from the same period last year (solar calendar), up 83.94%. 

The inventory in Lecong kept accumulating. On the supply side, the arrivals in Lecong market before and after the Chinese New Year holiday were relatively high, and the mounting supply pressure also led to the rapid accumulation of inventory in the Lecong market, reaching a five-year high. In the follow-up period, the HRC production of domestic mainstream steel mills may pick up in February, and the increase in local supply in south China will also be obvious. Before the price advantage disappears, the supply in the Lecong market will remain at a relatively high level. According to SMM research, some local processing factories and terminals have not yet fully resumed the production. It is expected that with the macro policies exerting power gradually, the HRC social inventory in Lecong will begin to fall starting from next week.