[SMM Analysis] Futures Market Continues to Heat Up, Has Ningbo's HRC Inventory Declined?

[SMM Analysis] Futures Market Continues to Heat Up, Ningbo HRC Inventory Declines? According to the SMM survey, this week, SMM Ningbo HRC large-scale inventory stood at 2.01 million mt (as of January 15), down 25,500 mt WoW. This week, the HRC futures market surged significantly, with a weekly increase of 5.19%. As of the afternoon close on January 17, the most-traded HRC 2505 futures contract settled at 3,484 yuan/mt. This week, spot prices in major cities also showed an upward trend, rising 60-130 yuan/mt WoW. Although the futures market continued to rally today, trading sentiment in most markets pulled back again, with daily transaction levels generally weak. According to the SMM survey, in the Ningbo spot trading market this week, mainstream HRC transaction prices rose sharply. As of the afternoon of January 17, late-session spot quotes were at 3,500-3,510 yuan/mt, up 130 yuan/mt from last Friday's 3,370 yuan/mt. This week, driven by macro factors, HRC transactions followed the futures market and heated up, with significant improvement in transactions on Tuesday and Wednesday, showing moderate daily trading levels. However, despite the continued rally in the futures market, spot transactions struggled to maintain momentum as downstream pre-holiday demand was largely released. Transactions on Thursday and Friday pulled back, remaining at a moderately low level overall. Meanwhile, Ningbo HRC inventory declined this week. Apart from the renewed release of some downstream demand before the holiday, the arrivals from mainstream steel mills decreased this week, leading to a noticeable drop. However, as the Chinese New Year approaches, traders' willingness to purchase from steel mills and sell remains moderate, with the focus still on post-holiday operations. Therefore, if steel mill arrivals normalize next week, Ningbo HRC inventory is expected to build up again. This week, SMM released the weekly balance data from its survey. With the end of steel mill maintenance cycles, HRC production continued to increase. Futures saw a strong rebound this week, coupled with some pent-up demand from last week. This week marked the final week of active end-user procurement before the holiday, with enthusiasm significantly heightened. Overall, social inventory saw a slight decline. Looking ahead, short-term new maintenance plans are limited, and HRC supply pressure remains high. As the year-end approaches, most manufacturing end-users are nearing their holiday break. HRC inventory buildup risks are expected to increase next week.

SMM

[SMM Analysis] Futures Market Continues to Heat Up, Has Ningbo's HRC Inventory Declined?

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