Chinese HRC inventories posted their largest weekly gain since March, adding 196,000 tonnes to reach 4.28 million tonnes. The build was concentrated in East China port warehouses, where stocks rose 6.1% to 1.82 million tonnes, reflecting an influx of imported slab and semi-finished steel from Southeast Asia.
Production has been slow to respond to weakening margins. Weekly HRC output remained at 3.15 million tonnes, nearly unchanged from the prior week. Capacity utilization edged down 1.2 percentage points to 78.2%, but this is still above the 75% level that typically triggers meaningful production cuts.
Domestic HRC demand is showing softness across end-use sectors. Appliance production, which had been a bright spot, moderated in June with output flat month-over-month. The automotive sector continued steady at 2.4 million vehicles produced per month, but export orders for Chinese vehicles are facing increased tariff scrutiny in the EU and US.
Export markets are providing an outlet for Chinese HRC. Chinese steel exports in May reached 10.2 million tonnes, up 16% year-over-year. However, anti-dumping investigations in the EU and tariffs in other markets are creating headwinds. Vietnam imposed a 12.4% provisional anti-dumping duty on Chinese HRC in early June.
The inventory build confirms weak demand. Buyers should delay restocking and push for lower prices. The 3,300-3,400 CNY/mt range on SHFE is likely in the near term if production does not adjust. For imported HRC, the anti-dumping trend narrows the sourcing pool and should support domestic prices in protected markets like the US and EU.