SHANGHAI, Aug 30 (SMM) – China's inventories of construction material rebar fell for the third straight week as of Thursday August 29 amid ongoing production cuts. But the overall declines expanded only slightly, due to lackluster procurement by distributors after renewed US-China trade fears and potential looser cutback in Tangshan panicked the market and sent spot prices down sharply.
Purchases improved in the second half of the week as bearish sentiment eased. Cheap products attracted greater interests.
Supply of rebar extended declines with electric arc furnace (EAF) steelmakers remained in suspension or cutbacks amid losses around 300 yuan/mt. Environmental cuts in key steelmaking cities of Wu’an and Handan intensified till the end of August and the previous joint production cuts were reflected in the spot market.
For September, tight supply of steel scrap will likely force some EAF steelmakers that use scrap as feedstock to suspend for up to 10 days, an SMM survey suggested.
Without any further negative development on the macro level, rebar spot prices will see upward momentum in the weeks ahead as supply decreases and demand recovers on waning impact of seasonality.
SMM data showed rebar inventories across social warehouses stood at 6.1 million mt as of Thursday August 29, down 2.9% on the week, after a decline of 0.7% a week ago.
Inventories across steel plants grew 3% on the week to stand at 2.62 million mt, compared with a 1.5% drop a week earlier, as distributors kept from stockpiling on downbeat market sentiment earlier this week.
Overall inventories of rebar, including stocks across steelmakers and social warehouses, slid 1.2% on the week and posted 8.71 million mt as of Thursday August 29, after they fell 0.9% in the prior week. On a yearly basis, inventories remained 38.4% higher
