Overall hot-rolled steel inventory in China extended its gains over the week ended Thursday July 5 as mills recovered their production and as demand weakened, we research found.
The overall inventory including social and in-plant stocks increased 1.1% from a week ago to 3.13 million mt as of July 5. Mills gradually recovered their production from maintenance or production limitations from the second half of June. Meanwhile, demand shrank on high temperature, rainy season and concerns over trade tensions between the US and China as well as the government’s curbs on shanty town revamps.
Social inventory rose by 1% to 2.11 million mt amid a sharp increase in the south. From May, growing volumes of cargoes from mills in north China flowed to southern markets as the south-north price spread widened from the end of April. The spread between Shanghai-Lecong and Tianjin stood at 120 yuan/mt as of July 5.
Inventory at mills went up 1.2% to 1.02 million mt due to traders’ weak buying interest on losses.
On a yearly basis, 20 weeks after the Chinese New Year, in-plant inventory was 5.9% higher while social and overall inventory was 20.2% and 13.2% lower, respectively.