China rebar inventories further slowed increase, storage capacity shortage sustained  

SHANGHAI, Mar 6 (SMM) – Growth in China’s inventories of construction steel rebar continued to slow this week as demand from end-users and speculators was in recovery mode with the coronavirus outbreak in China being effectively contained.

Construction sites outside Hubei, the epicentre of the COVID-19 outbreak, have restarted work and stepped up purchases of raw materials, which slowed the buildup in rebar inventories across social warehouses. However, there remained some invisible stocks stored in open space, which were not reflected in the social inventories, due to storage capacity shortage in south China’s Guangdong and south-west China’s Guizhou and Sichuan. 

Accumulation in rebar stocks at steelmakers also eased as steel mills that supply directly to downstream users saw inventories falling with the recovery of key construction projects, and some other steel plants transferred their stocks to social warehouses on the back of resumption of logistics. 

It remains noteworthy that rebar supply could also pick up as authorities prod factories to restart operations. Steel rolling mills in east China stepped up production on some marginal profits and suspended electric arc furnace (EAF) steelmakers mulled resumption in the middle of the month, which is expected to cap the upward momentum in spot rebar prices in the near term. 

SMM forecasts the operating rates of EAF steel mills to rebound to 30% in the second half of the month, from only 7.68% as of March 3. 

According to SMM data, rebar inventories at Chinese steelmakers stood at 7.71 million mt as of March 5. This was up 2.9% from February 27, compared to a 5.8% rise last week. 

Inventories across social warehouses advanced 7.1% on the week and stood at 13.24 million mt, with the rise slowing from a buildup of 11.7% in the previous week.

Overall inventories of rebar, including stocks across steelmakers and social warehouses, increased 5.5% and posted 20.95 million mt as of March 5, after an increase of 9.4% in the prior week. 

On a yearly basis, overall inventories were 67.8% higher as of March 5, following a buildup of 49.8% last week.