SHANGHAI, Jul 26 (SMM) – Growth in rebar inventories in China slowed this week as growing costs of steel scrap squeezed margins at steel mills and drove them into production cuts.
Steelmakers with iron ore as feedstock, however, remained under full operation, even as lower steel prices dragged their profits to 200 yuan/mt as of Thursday July 25, down 46 yuan/mt from a week ago.
Consumption from construction improved this week as sites stepped up operation at night while heat waves disturbed production during daytime hours. Demand from infrastructure and real estate sectors also released steadily and support steel consumption.
Narrower margins at steel mills will continue to reduce steel production. This, together with the lingering impact of environmental curbs, are expected to ease supply pressure of rebar in the short term.
SMM data showed that overall inventories of rebar, including stocks across steelmakers and social warehouses, grew 2.7% on the week and posted 8.53 million mt as of Thursday July 25, after they grew 3% in the prior week. On a yearly basis, inventories stood 34.2% higher, expanding from a growth of 28.9% last week.
As of July 25, inventories across social warehouses stood at 6.11 million mt, up 3% on the week, driven mainly by speculative operations.
Inventories across steel plants advanced 1.7% on the week, to stand at 2.42 million mt, slowing from a 3.4% rise a week earlier.