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China steel rebar inventory down 6.6% on week

iconMay 14, 2021 10:36
Source:SMM
Inventories of rebar across Chinese steelmakers and social warehouses stood at 11.1 million mt as of May 13, down 6.6% from a week ago. Stocks are down 6.7% from a year earlier.

SHANGHAI, May 14 (SMM) — The effective delivery date was less than five days in early May due to holiday factors. The market experienced a slight accumulation of stocks due to the concentrated arrival of steel mills. Steel prices have surged for several days in the second week after the holiday. The national average rebar prices stood at 6,050 yuan/mt as of May 14, up 635 yuan/mt from last week, which suppressed the release of rigid demand to a certain extent, and the daily trading volume gradually weakened. Total inventories continued to decline this week. In-plant stocks posted faster decrease, and the decline of social inventories was relatively small, which was 4.2 percentage points lower than last year.

Inventories of rebar across Chinese steelmakers and social warehouses stood at 11.1 million mt as of May 13, down 6.6% from a week ago. Stocks are down 6.7% from a year earlier.

Inventories at Chinese steelmakers fell 496,100 mt on the week and stood at 2.91 million mt. Stocks are down 14.6% from a week ago and down 14% from a year earlier. 

Due to the considerable profit, steel mills increased their production. According to SMM survey, the planned output of steel rebar in May increased 3-5%, and operating rates of electric furnace enterprises reached a record high of 89.55%. On the supply side, output will continue to rise if there is no further production restriction policy introduced. Therefore, steel mills may accelerate the transfer of inventory pressure to social stocks in the future, and in-plant stocks may continue to post faster decrease, while social stocks will continue to post slower decrease, and the risk of accumulation of inventory will increase.

Inventories at social warehouses fell 288,200 mt on the week and stood at 8.19 million mt, down 3.4% from a week ago and 3.8% lower from a year ago. The week-on-week decrease expanded 2.1 percentage points from the previous week. The year-on-year decrease fell 4.2 percentage points from the previous week.

Since there were only three effective shipping days last week, the month-on-month decline expanded.  Due to the poor performance of rigid demand on the demand side, according to market feedback, more than 56% of downstream construction sites have postponed construction and reduced purchases, while speculative demand is relatively strong, resulting in social inventories that have not been effectively digested.

The unexpected rise of the steel market this week broke away from the fundamentals of the industry. Under the positive macroeconomic conditions, capital boosts and the joint pull-up of steel mills, the spot market followed the rhythm of the futures market. The State Council’s meeting on May 12 conveyed a signal to actively respond to the rapid rise in bulk commodities, and the contract fell in the night trading. Although the spirit of the meeting itself is not so negative, the market sentiment has been panicked for so long and it also needs a time to release the pressure.

The futures market fluctuated and weakened yesterday, and the national spot market fell by 50-100 yuan/mt. The national average rebar prices stood at 6,050 yuan/mt yesterday, down 71 yuan/mt from May 12. The willingness to ship high-priced resources is strong, and the downstream holding currency is more confident that it will fall. Once the window of callback opens, there is a high possibility that the market will fall, and the market will gradually return to rationality and return to the fundamentals of the industry.

Inventory data
Rebar

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