SHANGHAI, Feb 7 (SMM) – Increase in inventories of construction steel rebar in China slowed this week, compared to the rise during the Chinese New Year holiday, as supplies shrank on the back of coronavirus outbreak.
The weekly production of rebar across Chinese steelmakers have slipped to low levels. Elevated stocks at steel mills on transportation curbs prompted producers to scale back production or bring forward maintenance schedule.
Pessimistic demand outlook depressed spot prices of rebar. This, coupled with delayed post-holiday return of workers, lowered the operating rates at electric arc furnace (EAF) steel mills.
Some steel plants cut offers to destock as subdued purchases by traders and disrupted delivery under long-term contracts on virus outbreak lifted inventories at steel mills. SMM expects neat-term production of rebar to stay at low levels.
Steel prices will likely remain weak before optimism around the virus development trigger a resumption of downstream demand.
According to SMM data, rebar inventories at Chinese steelmakers stood at 5.06 million mt as of February 6, a week after the extended CNY holiday. This was up 20.1% from February 3, compared to a buildup of 59.7% over the CNY holiday.
Inventories across social warehouses advanced 11.3% on the week and stood at 8.37 million mt, slowing from a buildup of 31.6% during the holiday.
Overall inventories of rebar, including stocks across steelmakers and social warehouses, increased 14.5% and posted 13.43 million mt as of February 6, after an increase of 40.4% over the holiday.
On a yearly basis, overall inventories were 14.4% higher as of February 6.
