SHANGHAI, Oct 18 (SMM) – China's inventories of construction steel rebar reverted back to drawdown in the week ended October 17 after the stocks ended seven straight weeks of slide with a 5.3% rise over the holiday period, according to an SMM survey.
Strong demand in peak construction season offset supply recovery after environmental restrictions were lifted in early October. This, coupled with selloffs by traders this week amid bearish sentiment, triggered a record decline in rebar social stocks since this year.
Inventories across steelmakers saw marginal drop this week as speculative buying weakened on pessimistic mood and as intensified checks on overfreight affected the shipments from steel mills to social warehouses.
Rising supply grow concerns about near-term rebar prices. Southern Chinese markets are expected to face greater supply pressure with cargoes delivering from the north as lower temperatures in the north dampen local consumption.
SMM expects current brisk consumption to provide strong support to spot rebar prices despite expected downward pressure.
SMM data showed that rebar inventories across social warehouses stood at 4.32 million mt as of Thursday October 17, down 11.2% from October 10, after the stocks grew 1.2% during September 26-October 10. Inventories across steel plants shrank 1.8% on the week to stand at 2.48 million mt.
Overall inventories of rebar, including stocks across steelmakers and social warehouses, slid 8% and posted 6.8 million mt as of Thursday October 17, reversing an increase of 5.3% in the prior two weeks.
On a yearly basis, overall inventories remained 15.1% higher as of October 17.