[SMM Analysis] Continuous Weakening of End-Use Demand and Increasing Inventory Buildup in Ningbo

[SMM Analysis] Continuous Weakening of End-Use Demand and Increasing Inventory Buildup in Ningbo

According to the SMM survey, the large-caliber inventory of HRC in Ningbo was 299,900 mt (as of August 8) this week, with a WoW increase of 45,200 mt.

This week, HRC prices first rose and then fell. The weekly increase in spot prices ranged from 10 to 30 yuan/mt. The market trading atmosphere was moderate, and downstream end-users' purchase willingness was average. By the afternoon close on August 8, the most-traded hrc2510 futures contract closed at 3,428 yuan/mt.

Meanwhile, according to the SMM survey, in the Ningbo spot trading market this week, in terms of prices, the transaction prices of mainstream HRC resources slightly increased. By the afternoon of August 8, the closing spot quotes were 3,470-3,480 yuan/mt, up 20 yuan/mt from 3,460 yuan/mt on Friday last week. In terms of transactions, futures prices first fell and then rose. The market trading atmosphere was relatively mediocre, and end-users' purchase willingness remained unimproved, with purchases mainly made on a need-based basis. In terms of arrivals, mainstream resources arrived normally, and some goods delayed due to shipping backlogs caused by typhoons arrived successively, leading to a slight increase in supply. In terms of inventory, the inventory buildup of HRC in Ningbo increased significantly this week, mainly due to poor performance on the demand side, low purchase willingness of end-users, and flat sales by traders. These price increases also failed to drive spot consumption, mostly involving speculative transfers of cargo rights. Meanwhile, the significant price increases last week released some demand in advance, resulting in a larger inventory buildup this week. Looking ahead, with the impact of the macroeconomic vacuum and the deepening off-season effects, it is expected that inventory in Ningbo will continue to build up in line with the cycle next week, but the magnitude will narrow.

This week, SMM released the weekly balance data for HRC. Affected by maintenance at some steel mills, HRC production slightly decreased this week. The social inventory of HRC in 86 warehouses (large sample) nationwide, as surveyed by SMM, was 3.2573 million mt this week, with a WoW increase of 65,300 mt, or 2.05% MoM, and a YoY decrease of 31.71% from the new calendar year. This week, the nationwide social inventory continued to accumulate. By region, except for slight destocking in north-east China and north China, inventory buildup occurred in east China, central China, and south China.

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