SHANGHAI, Oct 22 (SMM) - SMM data showed that inventories of hot-rolled coils (HRC) and plates across social warehouses and steelmakers, which are used in automobiles and home appliances, decreased 3.96% in the week ended October 23 to 3.98 million mt. The stocks were 29.3% higher than the same period last year.
Recently, HRC output has dropped significantly due to centralized maintenance in steel mills. Inventories of raw materials and finished products of end-users and sub end-users is not high, and the overall downstream demand still has support, leading to the continuous decline in HRC inventories this week.
HRC stocks across social warehouses decreased 2.58% in the week ended October 23 to 2.87 million mt. The stocks were 32.1% higher than the same period last year.
HRC stocks across social warehouses continued to decline due to the actual demand of end-users. However, the overall decline narrowed compared with last week as centralized restocking slowed down with the weaker market sentiment.
In-plant HRC inventories decreased 7.38% from October 16 and rose 22.6% year on year to 1.1 million mt in the week ended October 23, showed SMM data.
Recently, steel mills have concentrated on maintenance, resulting in a relatively low hot-rolled coils output in the past two weeks. Combined with the active shipment of steel mills, in-plant HRC inventories extended the decline, and the decline has expanded.
Although HRC inventories increased sharply post-holiday, the market has performed well in terms of the recent rate of stock reduction, which also supports the spot price to some extent. The centralized maintenance of steel mills on the supply side will gradually decrease, and hot-rolled coils output will go up somewhat with rising supply pressure compared with these two weeks.
The actual demand is not weak. However, it is difficult to maintain strong demand continuously but easy to maintain normal demand as its own processing profit is compressed. It is expected that HRC inventories will continue to decline next week, but the reduction will continue to narrow. Spot prices will also be supported by falling stocks in the near term.
