Up 6.2% from a month ago, slightly exceeding the optimum level

In July, the inventories of flat products in the distribution market increased 6.2% from a month ago to 1.07 million tons, exceeding their most optimum level by 960,000 tons.

As the major reasons for such an increase in the inventories of flat products last month in the distribution market, analysts are citing the sluggish sales during a seasonal low-demand period from July through August and the distributors’ excessive storing of the products in expectation for a price hike.

By item, inventories of hot-rolled coils and plates were relatively high in the distribution market. A sharp rise of 20.7% from a month ago in the imports of flat products in July worked as a factor to lift the overall inventories.

A survey conducted on August 21 by the Korea Iron & Steel Association on about 170 distributors showed that the inventories of flat products in the distribution market as of the end of July totaled 1.07 million tons, up 6.2% from a month ago.

Inventories of hot-rolled coils, the typical item of flat products, increased 8.8% in July compared with a month ago in an attempt to secure the products before a price hike. Inventories of heavy plates surged as high as 30% from a month ago in July.

In contrast, pickled and oiled steel sheets showed the largest decrease pace of 2.8% from a month ago in July, followed by electrolytic galvanized steel sheets with a drop of 2.2%, hot-dipped galvanized steel sheets with 1.8%, cold-rolled steel sheets with 1.5% and pre-painted steel sheets with 0.2%.

In July, imports of flat products posted 1.5 million tons, up 20.7% from a month ago and a rise of 12.7% from a year ago. It is mainly because of a sharp increase in the imports of Chinese hot-rolled coils and heavy plates by local importers and distributors who attempted to secure sufficient supply of them before the opening of the Beijing Olympic games in August in order to avoid possible frustration in the production and transportation of those steel products in China during the period of the Beijing Olympic games.

jhkwak@snmnews.com