[SMM Analysis] No Positive News in the Short Term; Northern HRC Inventory May Continue to Increase Next Week

This week, HRC inventory in Shenyang stood at 90,500 mt, up 4,600 mt WoW (+5.36%) and down 22,800 mt YoY (-20.12%).

This week, HRC inventory in Tangshan reached 395,500 mt, up 29,800 mt WoW (+8.15%) and down 330,000 mt YoY (-45.49%).

This week, HRC inventory in Boxing was 70,700 mt, up 13,500 mt WoW (+23.6%) and down 32,100 mt YoY (-31.23%).

In terms of supply, according to the SMM survey, the impact from HRC maintenance this week was 296,600 mt, up 169,600 mt WoW, leading to a reduction in actual HRC supply. On the demand side, HRC demand in northern China further declined, with end-user orders showing a gradual downward trend, especially in north-east and north-west China, where demand dropped significantly, forcing some steel mills to ship to other provinces. However, market participants exhibited strong risk-aversion sentiment, and winter stockpiling willingness remained low, with the fundamental imbalance in the HRC market expected to intensify. Regarding inventory, SMM statistics showed that the nationwide large-sample HRC social inventory was 3.0186 million mt this week, up 25,900 mt WoW (+0.87%), continuing the accumulation trend.

Looking ahead, on the demand side, northern demand is expected to remain at a low level in the short term with no positive news, and downstream end-users may continue purchasing as needed, leading to a slight weakening in overall HRC transactions. On the supply side, according to the SMM survey, next week's impact from HRC maintenance is expected to be 191,200 mt, down 105,400 mt WoW, making it difficult for HRC supply to decrease further. Additionally, this week, the SMM blast furnace capacity utilization rate was 87.01%, down 0.56 percentage points WoW, with daily pig iron production at sample steel mills at 2.3476 million mt, down 15,000 mt WoW. Therefore, HRC inventory in northern cities is expected to remain in an accumulation state next week.