China steel rebar inventories fell at faster pace on week

SHANGHAI, Apr 10 (SMM) – 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. 

Social inventories of rebar declined faster than expected this week, on the back of steady purchases by construction companies that have gotten back to normal operations. Stepped-up stockpiling before and after the Qingming Festival holiday also facilitate the decline in rebar social stocks. 

The decline in rebar inventories at steel plants was slower than that in the social stocks as steelmakers, especially EAF steel mills, ramped up production on falling prices of feedstock steel scrap. SMM assessed that steel scrap prices in Changzhou have slipped 210 yuan/mt since post-holiday. 

SMM expects the overall rebar inventories to further trend downsides in the weeks ahead with the traditional peak demand season postponing to April-May from the traditional March-April period. 

While the upward room in the output increase at EAF steel mills is limited, in-plant inventories of rebar will unlikely fall significantly in the near term as blast furnace steelmakers have shown little willingness to cut output. 

According to SMM data, rebar inventories at Chinese steelmakers stood at 5.39 million mt as of April 9. This was down 7.1% from April 2, compared to a decline of 7% last week. 

Inventories across social warehouses shrank 5.6% on the week and stood at 12.03 million mt, after dipping 4% in the previous week.

Overall inventories of rebar, including stocks across steelmakers and social warehouses, fell 6.1% and posted 17.42 million mt as of April 9, after a decline of 5% in the prior week.

On a yearly basis (common calendar), overall inventories were 81.9% higher as of April 9, following a buildup of 79.6% last week.