SHANGHAI, Dec 13 (SMM) – Inventories of construction steel rebar in China rose for the second consecutive week as of December 12, but at a slower pace from a week ago, as downstream demand came in better than expected amid improved market sentiment and warmer weather this winter.
A SMM survey found that, construction sites in most regions, except for areas in north China such as Xinjiang, continued to ramp up operation before Chinese New Year holiday.
Bearish prospects for the steel market eased following news of a domestic further boost to infrastructure spending in the new year. This lifted rebar futures and accelerated the release of spot demand.
Maintenance and restricted production at steel mills also contributed to the slower increase in rebar inventories.
Steelmakers in north China’s Shanxi province were faced with environmental production curbs this week, showed a SMM survey. Major steel producers in the east conducted regular maintenance in the first half of December, which also affected rebar supply.
Near-term production of rebar will remain under pressure as areas including Anyang, Tangshan, Shanxi, and Xuzhou activated or escalated smog alerts on December 13.
SMM expects production curbs and resilience of demand to narrow any downward room in spot rebar prices next week. Northern China’s region, meanwhile, will still see some downside risk in spot prices with an influx of materials from the north.
According to SMM data, rebar inventories at steelmakers stood at 2.03 million mt as of December 12, around seven weeks prior to the Chinese New Year holiday. This was up 0.4% from December 5, compared to a 7.1% rise last week.
Inventories across social warehouses climbed 1% on the week and stood at 2.76 million mt, slowing from a buildup of 2.4% in the previous week.
Overall inventories of rebar, including stocks across steelmakers and social warehouses, increased 0.8% and posted 4.78 million mt as of December 12, following after an increase of 4.3% in the prior week.
On a yearly basis, overall inventories remained 1.7% lower as of December 12.