[SMM HRC Weekly Balance & Social Inventory Overview] Social Inventory Begins Pre-Holiday Inventory Buildup but Overall Performs Better Than Seasonality

Ø  Weekly Balance of HRC

Ø  HRC Production Continued to Increase WoW This Week

Ø  This week, steel mills maintained stable production enthusiasm, and HRC production increased slightly.

Ø  HRC Social Inventory Began Pre-Chinese New Year Buildup This Week

This week, SMM statistics showed that the HRC social inventory across 86 warehouses nationwide (large sample) reached 3.0949 million mt, up 175,400 mt WoW (+6.01%) and down 25.38% YoY (lunar calendar). The nationwide inventory buildup accelerated this week. By region, except for moderate inventory declines in central and north-east China, the inventory buildup in south, east, and north China accelerated significantly. Specifically:

l  [Shanghai] HRC Inventory Began to Build Up in Shanghai This Week

This week, Shanghai's HRC inventory reached 294,300 mt, up 41,400 mt WoW (+16.37%), with a Gregorian YoY decline of 14.22% and a lunar YoY decline of 24.87%.

l  [Lecong] Pre-Holiday Inventory Buildup Continued in Lecong

This week, Lecong's HRC inventory reached 65.1 mt, up 61,300 mt WoW (+9.42%), with a lunar YoY increase of 45,400 mt (+6.97%).

l  [Zhangjiagang] Inventory Continued to Decline in the Last Week Before the Holiday

This week, Zhangjiagang's HRC inventory reached 403,000 mt, down 13,000 mt WoW (-3.13%), with a Gregorian YoY decline of 12.39% and a lunar YoY decline of 16.04%.  

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l  [Tangshan] HRC Inventory Continued to Build Up in Tangshan This Week

This week, Tangshan's HRC inventory reached 438,400 mt, up 24,800 mt WoW (+6.00%), with a YoY decline of 339,200 mt (-43.62%).

Steel mills remained active in production, and HRC production continued to increase. Futures performed weakly this week, coupled with some traders and end-users in certain regions starting their holidays, resulting in limited demand release. Overall, social inventory began pre-holiday buildup. Looking ahead, steel mills are expected to maintain high production enthusiasm, leading to significant supply pressure for HRC. With the traditional Chinese New Year approaching, the market is largely characterized by prices without transactions. Nationwide social inventory is expected to continue building up, but overall, pre-holiday end-use demand remains moderate, and the inventory buildup is better than seasonal norms.