SHANGHAI, Jul 23 (SMM) - SMM data showed that HRC stocks across social warehouses and steel makers rose 68,100 mt or 1.71% on the week, an increase of 5.19% than a year ago, to 4.06 million mt in the week ended July 22.
Futures and spot prices of HRC mainly fluctuated this week, with spot trade still weak. Overall inventory continued to go up amid the decline of steel mill output.
Inventories across social warehouses increased 78,400 mt or 2.66% week on week to 3.03 million mt. This was 11.32% higher than the same period last year.
Steel mills have been actively shipping goods recently, and the stocks were transferred rapidly from mills to social warehouses. End demand remained weak in the off-peak season. The outbound, opening, and closing volumes averaged low at major warehouses in the market. The social inventories are hard to decline.
Stocks at Chinese steel makers came in at 1.03 million mt, down 10,300 mt or 0.99% week on week and a decrease of 9.48% year on year.
With the expanding production cuts at domestic steel mills, HRC output declined slightly this week, and steel mills actively shipped goods, resulting in the lower in-plant inventories.
As the production reduction and restrictions have been gradually implemented in more regions since early July, the output of major steel products has declined this week. The policy on output cuts of crude steel has made substantial progress, which is in line with market expectations.
Jiangsu, Shandong, and Guangxi have all formulated plans to reduce production in the short term, which will provide strong support for steel prices.
On the demand side, the Ministry of Commerce once again mentioned to expand domestic demand to promote consumption after the reduction of required reserve ratio. Steel demand is expected to improve.
Overall HRC prices are expected to fluctuate higher in the short term. However, the government is taking measures to stabilise prices, and the market continuously hears the news of export tariff increase, which will limit the upward room of HRC prices. The sheet prices are mostly affected.
