[SMM HRC Daily Review] Pre-Holiday Stocking Demand Expected to Release, HRC Prices Likely to Strengthen Slightly Next Week

This week, the HRC market retreated after a rapid rise, with overall trading volume down WoW. Supply side, steel mill maintenance for hot rolling increased, leading to a slight decline in HRC production. Demand side, market demand did not reach peak season levels, and weekly apparent consumption of HRC continued to weaken slightly. Inventory side, SMM statistics show that national social inventory of HRC across 86 warehouses (large sample) stood at 3.7104 million mt, up 69,700 mt WoW, an increase of 1.91% WoW. The buildup in national social inventory was significant this week. By region, except for slight declines in northeast and east China, all other regions experienced inventory buildup. Cost side, the second round of coke price cuts was implemented, while iron ore prices strengthened slightly, resulting in rangebound fluctuations in HRC cost support. News side, the US Fed cut interest rates by 25 basis points, in line with market expectations. Looking ahead, coke prices are stabilizing, iron ore prices are rising slightly, cost support is strengthening somewhat, and coupled with the impending release of pre-holiday stocking demand, HRC prices are expected to strengthen slightly. The most-traded HRC futures contract is projected to trade in the range of 3,310-3,450 next week.