Growth in social inventories of rebar slows on week

SHANGHAI, Aug 2 (SMM) – China's inventories of rebar continued its increases this week but growth across social warehouses slowed from a week ago, indicating recovering downstream purchases, an SMM survey showed on Thursday August 1. 

Top margins of rebar among steel products continued to fuel production and most electric arc furnace (EAF) steelmakers have yet to implement cutback plan despite losses. This accounted for the growing inventories of rebar. 

Speculative buying weakened after Tangshan eased local steel production curbs in the August smog control draft plan on July 31. Downstream demand across most regions, except for south-west China that suffered from dryness, released steadily this week. 

SMM expects production cuts at EAF mills to ease rebar supply pressure in the weeks ahead. Construction sites are likely to step up operation ahead of the National Day holiday in October, and this could support steel prices in August. 

SMM data showed rebar inventories across social warehouses stood at 6.24 million mt as of August 1, up 2.1% on the week, slowing from a buildup of 3% a week ago.

Inventories across steel plants advanced 4.8% on the week, to stand at 2.53 million mt, accelerating from a 1.7% rise a week earlier.  

Overall inventories of rebar, including stocks across steelmakers and social warehouses, grew 2.9% on the week and posted 8.78 million mt as of Thursday August 1, after they grew 2.7% in the prior week. On a yearly basis, inventories stood 38.8% higher, expanding from a growth of 34.2% last week.