China’s hot-rolled steel social inventory rebounded 1.2% year on year to 2.22 million mt as of August 9. While cargo arrivals across major markets stayed firm over the week, slow downstream demand in slack season grew the inventory. 

Social inventory extended its increase and rose 2% on a weekly basis, marking the fourth consecutive week of gains. 

Meanwhile, hot-rolled steel in-plant inventory fell 2.1% on the week to 985,600 mt because mills cut production on environmental restrictions and lower profits. 

Higher profit of rebar also drove some mills to produce more of such product in August at the expense of hot-rolled coil. The gap between profits of rebar and hot-rolled steel narrowed to 78 yuan/mt as of August 9, from some 130 yuan/mt a month ago. 

Profit margins at hot-rolled steel mills dipped some 6% over the week due to rising costs of raw materials such as metallurgical coke and steel scrap. 

The overall volumes including social and in-plant inventories, rose 0.7% from a week earlier to 3.2 million mt. The figure was 5.1% higher from the same period last year.

Besides, price of hot-rolled steel hovered at highs on the week with buoyance from environmental restrictions, despite slow season. Expectation of high-season demand in the near future also provided support. It is assessed that domestic average price of the product at 4,299-4,299 yuan/mt on August 9. 

• [Editor:Wang Linyan]