SHANGHAI, Apr 3 (SMM) – Inventories of steel rebar across Chinese steelmakers and social warehouses fell for the third consecutive week as of April 2 with the downstream demand in steady recovery. Compared with the same period after the Chinese New Year holiday, however, the stocks extended its increase as of April 2, which together with potential greater arrivals of foreign steel billet, pointed to lingering pressure on spot rebar prices. 

SMM research showed that demand from downstream consumers has resumed to more than 60% following stagnated growth in the first half of March amid the coronavirus impact. This sustained the slide in rebar social inventories this week. However, accelerated shipments from steel mills to social warehouses expanded the year-on-year increase in social stocks. 

The weekly decline in in-plant stocks of rebar slowed down, prompted by stepped-up production at electric arc furnace (EAF) steel mills and blast furnace steelmakers. As of March 31, operating rates across EAF steel plants climbed close to 30 percentage points from mid-March to 48.64%, showed SMM data. Supply from blast furnace steelmakers also increased as they shifted capacity to rebar to chase higher profits. 

With the increased operations at producers, rebar supply is expected to continue to outpace demand in the short term, keeping spot rebar prices under downward pressure. 

According to SMM data, rebar inventories at Chinese steelmakers stood at 5.8 million mt as of April 2. This was down 7% from March 26, slowing down from a 7.3% decline last week. 

Inventories across social warehouses shrank 4% on the week and stood at 12.74 million mt, after dipping 3.7% in the previous week.

Overall inventories of rebar, including stocks across steelmakers and social warehouses, fell 5% and posted 18.55 million mt as of April 2, after a decline of 4.9% in the prior week.

On a yearly basis, overall inventories were 93.7% higher as of April 2, following a buildup of 89% last week.