Construction demand, freight backlog lower rebar stocks

SHANGHAI, Dec 7 (SMM) – High downstream demand from construction sites and freight backlog on bad weather lowered social and in-plant inventories of rebar this week. This came after a week-on-week rebound of 0.7%, or 35,800 mt, in overall rebar stocks last Thursday. 

Overall inventories, including social and in-plant stocks, shrank to 4.77 million mt as of Thursday December 6, down 5.8% on the week but up 2.5% on the year. Both social and in-plant stocks fell on a weekly basis. 

Social stocks declined 1.6% on the week and dipped 4.8% on the year to stand at 2.93 million mt as of this Thursday. Inventories across steel mills stood at 1.83 million mt as of December 6, down 11.9% from a week ago but up 16.8% from a year ago. 

Construction sites in the south accelerated operation after cash flow issues eased in October. In the north, operation period at building sites extended to December compared with last year, when restrictions suspended their operation across the board as of December 2017. 

This week, stormy weather deterred delivery of some 500,000 mt of steel cargoes, in a total of 40 vessels, at Bayuquan port in China’s northern province of Liaoning. Potential backlog is expected at Tangshan ports in the short run as smog and wind will affect the area. 

Declines in rebar inventories are unlikely to sustain for long as cold weather in Jiangsu and Zhejiang provinces will gradually lower operation at construction sites, SMM believes 

Separately, social inventories of long steel, including wire rods and rebar, in Guangzhou of Guangdong province started to rebound after they shrank 12,600 mt, or 2.37%, a week ago, SMM data showed.