China rebar inventories extended increase on week

SHANGHAI, Feb 14 (SMM) – China’s inventories of construction steel rebar extended their increase this week, primarily due to a loss in demand amid coronavirus outbreak.

The inventory growth also accelerated as cargoes previously in transit had arrived at warehouses with the gradual recovery of logistics. But demand will likely to recover soon as some major projects in the market had shown signs of resuming construction, SMM learned. 

The increase in social inventories of rebar was significantly slower than the inventory buildup at steelmakers, as some transportation curbs remain in place. Most steel plants reported greater inventory pressure and insufficient storage capacity, and some were compelled to scale back output or underwent maintenance. 

Rising inventories continued to keep spot prices of rebar under pressure, but the downside potential will be limited as market participants await the release of pent-up demand with the recovery of logistics. 

According to SMM data, rebar inventories at Chinese steelmakers stood at 6.2 million mt as of February 13. This was up 22.7% from February 6, compared to a 20.1% rise last week. 

Inventories across social warehouses advanced 15.9% on the week and stood at 9.7 million mt, accelerating from a buildup of 11.3% in the previous week.

Overall inventories of rebar, including stocks across steelmakers and social warehouses, increased 18.5% and posted 15.9 million mt as of February 13, after an increase of 14.5% in the prior week. 

On a yearly basis, overall inventories were 21.1% higher as of February 13, following a buildup of 14.4% last week.