Crude steel output across major mills in China averaged 2.05 million mt per day in the first 10 days of May.

Planned output of construction steel rebar across China’s major blast furnace steelmakers in May rose 15.24% from the planned production in April to 9.16 million mt,  on the back of steelmakers return from maintenance and diverted capacity to rebar in the chase of higher profits, showed an SMM survey.

Chinese electric arc furnace (EAF) steelmakers operating rates continued to edge higher as of early May, driven by the resumption of producers in central China as the spread of the coronavirus has stalled. However, the rally in operations will be constrained due to a surge in feedstock steel scrap prices. 

While production expands, inventory pressure at steel plants continued to reduce on the back of growing consumption, and this may provide upward momentum in near-term steel prices. 

Inventories of hot-rolled coils of steel sheets used to produce home appliances and cars in China fell for an eighth straight week this week, as demand remained robust. SMM data showed that HRC stocks across social warehouses and steelmakers decreased 2.31% in the week ended May 7 to 4.45 million mt. That was smaller than a 4.6% fall in the previous week due to the Labour Day holiday and improved arrivals.

Prices of construction steel rebar will likely stay rangebound in the weeks ahead, underpinned by strong demand from stepped-up operations at construction sites while supply pressure continues to mount. 

Inventories of steel rebar across Chinese steelmakers and social warehouses slowed their year-on-year buildup as of April 16, the first time since the Chinese Year holiday, a sign that a high demand season may have arrived with the rise in consumption surpassing the supply increase.

SMM data showed that HRC stocks across social warehouses and steelmakers decreased 4.56% in the week ended April 16 to 5.02 million mt, marking a fifth straight week of decline and larger than a 3.59% fall in the previous week.

Nearly 20 major steelmakers in China have raised their quotes for spot construction steel sales following a substantial rally in futures that began in early April. The increases in quotes, varying from 10 to 50 yuan/mt, did not mute trades, SMM research found.

Inventories of steel rebar across Chinese steelmakers and social warehouses fell for the fourth consecutive week as of April 9 with the steady recovery of demand as construction work has normalised. Compared with the same period a year earlier, however, the stocks continued their buildup, which remains the headwinds facing spot prices of rebar.