China steel rebar inventories fell for two weeks, but remained higher on year

SHANGHAI, Mar 27 (SMM) – Inventories of steel rebar across Chinese steelmakers and social warehouses fell for the second consecutive week as of March 26 on the back of improved downstream purchases. However, the overall inventories remained significantly higher than the same period after the Chinese New Year holiday last year, which threatens some downside risk in spot rebar prices. 

SMM expects the overall inventories to return to levels of the previous year only around mid-May. 

Downstream demand from construction and infrastructure sectors kept recovering with the work resumption rate above 80% as of March 25, showed an SMM survey. Cash flow burden at month-end prompted some traders to clear inventories, which also accounted for the lower inventories on week. 

Inventories across steel mills extended their decline from the prior week amid rising demand and continued deliveries from steel plants to social warehouses. The weekly decline in in-plant stocks, however, slowed from last week, likely due to ramped-up production after rebar profits surpassed that of hot-rolled coil.

According to SMM data, rebar inventories at Chinese steelmakers stood at 6.24 million mt as of March 26. This was down 7.3% from March 19, compared to a 10.8% decline last week. 

Inventories across social warehouses shrank 3.7% on the week and stood at 13.28 million mt, after dipping 1% in the previous week.

Overall inventories of rebar, including stocks across steelmakers and social warehouses, fell 4.9% and posted 19.52 million mt as of March 26, after a decline of 4.4% in the prior week, which was the first weekly decline since the Chinese New Year holiday.

On a yearly basis, overall inventories were 89% higher as of March 26, following a buildup of 84.6% last week.