SHANGHAI, Dec 20 (SMM) – Inventories of construction steel rebar in China rose for the third consecutive week as of December 19, and the increase was at a faster pace than a week ago as a seasonal lull depressed fundamentals.
On a yearly basis, however, inventories remained lower as of December 19, likely due to a warmer winter that facilitated the release of downstream demand and some amounts of hidden stocks backlogged at ports.
A greater proportion of stocks at steelmakers moved to downstream consumers instead of entering social warehouses, amid limited buying interest by traders, and this could also account for the overall lower inventories year on year.
This week, rebar inventories at steel mills climbed both on the weekly and yearly basis as production expanded while higher spot prices slowed the winter stockpiling by traders.
In the week ended December 19, the national average prices of rebar stood 46 yuan/mt higher than a year earlier, SMM assessed.
Data from the National Bureau of Statistics (NBS) showed that China’s output of rebar rose 17.7% from November 2018 to 22.41 million mt last month, while output of wire rods increased 3.1% to 13.52 million mt.
Both weak demand and supply in north China, such as Beijing, will likely see local prices of spot rebar staying firm in the short term as prices have slipped to nearly a one-year low.
In southern China’s markets, however, influx of materials from the north will continue to put some downside pressure on rebar prices.
According to SMM data, rebar inventories at steelmakers stood at 2.07 million mt as of December 19, around six weeks prior to the Chinese New Year holiday. This was up 2% from December 12, compared to a 0.4% rise last week.
Inventories across social warehouses climbed 2.9% on the week and stood at 2.83 million mt, accelerating from a buildup of 1% in the previous week.
Overall inventories of rebar, including stocks across steelmakers and social warehouses, increased 2.5% and posted 4.9 million mt as of December 19, following after an increase of 0.8% in the prior week.
On a yearly basis, overall inventories remained 3% lower as of December 19.