SHANGHAI, Sep 20 (SMM) – China's inventories of construction material rebar shrank for the sixth straight week as of Thursday September 19, but the decline slowed from a week ago as steelmakers recovered on improved margins and spot trades suspended during the Mid-Autumn festival holiday last weekend.
Higher steel prices improved profits at steel mills and drove them to resumption. An SMM survey showed that the average operating rates across electric arc furnace (EAF) steelmakers stood at 59% as of Thursday September 19, up 3 percentage points from the start of the month.
Still, actual downstream demand remained firm and this extended declines in the overall inventories. Expectations of higher prices and favourable weather accelerated the release of downstream demand this week. Consecutive declines in inventories also spurred speculative buying among traders.
It remains noteworthy that both demand and supply could be affected as environmental restrictions tighten next week before the National Day on October 1.
SMM data showed that rebar inventories across social warehouses stood at 5.26 million mt as of Thursday September 19, down 4.2% on the week, after they fell 6.8% a week ago.
Inventories across steel plants grew 0.2% on the week to stand at 2.2 million mt, compared with an 8.2% decline a week earlier.
Overall inventories of rebar, including stocks across steelmakers and social warehouses, slid 2.9% and posted 7.46 million mt as of Thursday September 19, slower from a decline of 7.2% in the prior week.
On a yearly basis, overall inventories remained 25% higher as of September 19.
