SMM HRC Weekly Balance & Social Inventory Review: Pre-Holiday Restocking Demand Falls Short of Expectations, Social Inventory Reduction Narrows

Ø  HRC Weekly Balance

Ø  This week's production fluctuated rangebound WoW

This week, steel mills in south China resumed production after maintenance, while some mills in the north continued maintenance, resulting in HRC production fluctuating rangebound WoW.

Ø  This week's HRC social inventory decline narrowed

This week, SMM statistics showed that the HRC social inventory in 86 warehouses nationwide (large sample) was 4.0818 million mt, down 98,800 mt WoW, a 2.36% WoW decline, and a 6.09% YoY decline. The national social inventory continued to decline this week, but the decline narrowed. By region, the decline in the south China market was significantly higher than in the east and north China markets, while central and north-east China saw a slight inventory buildup. Details:

l  [Shanghai] Shanghai inventory continued to decline this week

This week, Shanghai HRC inventory was 33.58 mt, down 1.88 mt WoW, a 5.30% decline; the YoY decline was 11.52%, and the lunar YoY decline was 13.32%.

l  [Lecong] Supply remained low, Lecong inventory continued to decline

This week, Lecong HRC inventory was 85.05 mt, down 73,600 mt WoW, a 7.96% decline; the YoY decline was 129,500 mt, a 13.21% YoY decline.

l  [Zhangjiagang] Steel mill shipments increased, Zhangjiagang inventory saw a slight buildup this week

This week, Zhangjiagang HRC inventory was 440,000 mt, up 21,000 mt WoW, a 5.01% increase; the YoY increase was 7.84%, and the lunar YoY increase was 16.40%.

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This week, the impact of maintenance continued to weaken, and HRC supply increased slightly; futures fluctuated downward, and although it was before the Qingming Festival, the weak market sentiment led to poor trading, while steel mills actively shipped, narrowing the decline in social inventory. Looking ahead, the number of rolling lines under maintenance or planned for maintenance is relatively low in the short term, and supply pressure is expected to continue to rebound, while domestic end-use demand may remain resilient in April. Attention should be paid to export risks and cautious resource return, and the national social inventory is expected to continue to decline in the short term.