[SMM Analysis] Arrivals Increase & Demand Weakens, Ningbo Inventory Accumulates Significantly

[SMM Analysis] Arrivals Increase & Demand Weakens, Ningbo Inventory Accumulates Significantly

According to the SMM survey, the large-caliber inventory of SMM Ningbo HRC this week was 345,200 mt (as of August 20), with a WoW increase of 45,700 mt.

This week, HRC prices fluctuated downward, with weekly spot price declines of 30-80 yuan/mt. The market trading atmosphere was poor during the week, with downstream end-users mainly adopting a wait-and-see approach. As of the afternoon close on August 22, the most-traded HRC 2510 futures contract closed at 3,361 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 fell sharply. As of the afternoon of August 22, the closing spot quotes were 3,410-3,420 yuan/mt, down 60 yuan/mt from 3,480 yuan/mt last Friday. In terms of transactions, the futures market was in the doldrums, and the overall market trading atmosphere was poor. Sales at lower prices were moderate, but it was difficult to sell at firm prices. End-users remained cautious, and the overall demand for uncoiling was weak. In terms of arrivals, mainstream resources increased significantly, with more shipments arriving, leading to a notable rise in overall supply pressure. In terms of inventory, the accumulation of Ningbo HRC inventory expanded significantly this week, mainly due to a significant increase in supply coupled with still weak downstream demand. Therefore, the accumulation slightly exceeded market expectations, but the overall inventory remained at a low level compared to the same period, and the contradiction was not significant. Looking ahead, prices in the Ningbo area still have advantages compared to most other regions and are relatively resilient. Therefore, it is expected that Ningbo inventory will fluctuate rangebound next week, and the destocking turning point will not appear in the short term.

This week, SMM released the weekly balance data for HRC. This week, some steel mills initiated a new round of maintenance cycles, and HRC production decreased MoM. The SMM-tracked social inventory of HRC in 86 warehouses nationwide (large sample) was 3.4237 million mt this week, with a WoW increase of 118,900 mt, or 3.62% MoM, and a YoY decrease of 29.67% from the new calendar year. This week, social inventory nationwide continued to accumulate. By region, except for a slight decrease in central China, all other regions experienced inventory buildup, with east China seeing the largest increase in inventory.

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