China's rebar inventories shrink after five-week rise

SHANGHAI, Aug 16 (SMM) – China's inventories of rebar ended its five consecutive weeks of increases as of Thursday August 15 as more steel mills produce with blast furnaces were on board to cut production after losses drove electric arc furnace (EAF) steelmakers into cutbacks. 

Expectation of lower supply, together with de-escalated China-US trade dispute on US tariffs delay, boosted the outlook for futures prices. 

Spot trades revived this week as downstream producers stepped-up procurement after the typhoon and high-temperature weather. Release of pent-up demand and reconstruction need across flood-hit areas will support spot prices of steel in the weeks ahead. 

Earlier this week, six major steelmakers in east China’s Shandong province agreed to cut production of steel building materials by a combined volume of 400,000 mt. This followed after the decision of joint production cuts across steelmakers in Shaanxi, Shanxi, Gansu and Sichuan, in a bid to prop up steel prices, as recent price declines had pushed mills to the verge of losses.

SMM data showed rebar inventories across social warehouses stood at 6.32 million mt as of Thursday August 15, down 0.6% on the week, after a buildup of 1.8% a week ago.

Inventories across steel plants shrank 1.2% on the week to stand at 2.58 million mt, compared with a 2.8% rise a week earlier. 

Overall inventories of rebar, including stocks across steelmakers and social warehouses, slid 0.7% on the week and posted 8.9 million mt as of Thursday August 15, after they grew 2.1% in the prior week. On a yearly basis, inventories remained 43.6% higher.