[SMM HRC Weekly Balance & Social Inventory Overview] High Supply Pressure, Inventory Continues to Accumulate for Two Weeks After the Holiday

Ø  Weekly Balance of HRC

Ø  Steel Mill Production Schedule in February Rose MoM, Short-Term Production Fluctuates at High Levels 

Steel mills' domestic trade orders in February were relatively good, with high production enthusiasm. This week, HRC production increased slightly WoW.

Ø  Significant Inventory Buildup of HRC Social Inventory This Week

 According to SMM statistics, the HRC social inventory of 86 warehouses nationwide (large sample) reached 4.452 million mt this week, up 364,700 mt WoW (+8.92%) and down 14.01% YoY based on the lunar calendar. In the second week after the holiday, national social inventory continued to build up. By region, east China, south China, and north China markets saw larger inventory increases. Specifically:

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[Shanghai] Inventory Continued to Build Up in the Second Week After the Holiday

Shanghai's HRC inventory reached 389,800 mt this week, up 40,700 mt WoW (+11.66%), with a Gregorian YoY decline of 0.49% and a lunar YoY decline of 16.37%. 

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[Lecong] Inventory Accumulated Faster in the Second Week After the Holiday

Lecong's HRC inventory reached 98,190 mt this week, up 101,900 mt WoW (+10.38%), with a lunar YoY increase of 39,100 mt (+3.98%). 

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[Zhangjiagang] Slight Inventory Reduction in the Second Week After the Holiday

Zhangjiagang's HRC inventory reached 446,000 mt this week, down 5,000 mt WoW (-1.11%), with a Gregorian YoY decline of 2.19% and a lunar YoY decline of 14.07%. 

Currently, steel mills maintain high production enthusiasm, and HRC production continues to increase. After the holiday market reopening, transactions have slightly improved, but the supply growth still outpaces demand growth, leading to continued inventory buildup. Looking ahead, according to the SMM survey, steel mills' enthusiasm for HRC production in February remains strong, with daily average production increasing. Supply pressure remains significant, and the full resumption of end-user operations may take time. In the short term, there is still resistance for national social inventory to shift from accumulation to reduction.

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