[SMM Analysis] Futures Pull Back as Ningbo HRC Continues Destocking Before the Holiday

[SMM Analysis] Futures Pulled Back, Ningbo HRC Continued Destocking Before the Holiday According to the SMM survey, this week, SMM's large-scale inventory of Ningbo HRC stood at 2.105 million mt (as of January 2), down 36,000 mt WoW. This week, HRC futures fluctuated rangebound, but the futures market saw a significant pullback on Friday, with a decline of 1.32%. As of the afternoon close on January 3, the most-traded HRC 2505 futures contract settled at 3,377 yuan/mt. This week, spot prices in major cities also showed a downward trend, with prices down by 10-60 yuan/mt MoM. Affected by futures market fluctuations, most markets saw moderate to low trading activity today, and HRC transactions weakened. According to the SMM survey, in the Ningbo spot trading market this week, the transaction prices of mainstream HRC resources slightly declined. As of the afternoon of January 3, late-session spot quotes were at 3,440-3,450 yuan/mt, down 10 yuan/mt from last Friday's 3,450 yuan/mt. Overall, HRC transactions this week were at moderate to low levels, with Friday's transactions weaker than the weekly average. Meanwhile, Ningbo HRC continued its destocking trend this week, though the decline narrowed. Based on surveys with agents of mainstream steel mills, a large volume of new arrivals is expected next week. Additionally, Ningbo HRC prices are currently at a premium compared to most mainstream markets, and some external steel mill supplies from south China are expected to arrive in Ningbo within one to two weeks, posing a potential inventory buildup risk next week. This week, SMM's weekly balance data showed that steel mill maintenance was mainly concentrated in east and central China, with HRC production down 43,200 mt WoW. As the year-end approaches, some downstream processing enterprises are preparing for holidays, while traders' willingness to sell remains high. Social inventory continued to decline, though the decrease narrowed. Looking ahead, with some steel mill maintenance nearing completion, short-term HRC production may see a slight increase. However, the expectation of seasonal demand weakening has intensified, and HRC inventory is expected to start building up next week.

SMM

[SMM Analysis] Futures Pull Back as Ningbo HRC Continues Destocking Before the Holiday

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