China steel rebar inventory likely to accelerate decline next week

SHANGHAI, May 8 (SMM) – Inventories of steel rebar across Chinese steelmakers and social warehouses continued to trend downwards as of May 7, while the decline narrowed from a week ago due to reduced purchases over the past Labour Day holiday. 

SMM expects the overall rebar stocks to speed up falling next week as end-users step up restocking after the holiday and a rally in rebar futures bolster trades. This will keep spot rebar prices supported even on the prospect of a significant increase in output at blast furnace steelmakers. 

In the week ended May 7, in-plant rebar inventories continued to fall at a faster pace than that of social stocks, driven by stable shipments from steel mills and output reduction at electric arc furnace (EAF) steelmakers. 

EAF steel mills produced in lower gears as they faced difficulties in procuring feedstock steel scrap amid supply shortage. Rising steel scrap prices eroded profits at those steelmakers and this also depressed the production enthusiasm. 

This week, strong consumption, together with eased caution with a rebound in steel billet prices, facilitated rebar delivery from social warehouses and extended the slide in social stocks. 

According to SMM data, rebar inventories across social warehouses stood at 9.21 million mt as of May 7. This was down 5.7% from April 30, compared to a 7% decline last week. 

Inventories at Chinese steelmakers shrank 7.7% on the week and stood at 3.82 million mt, the ninth consecutive week of decline, after dipping 8.9% in the previous week. 

Overall inventories of rebar, including stocks across steelmakers and social warehouses, fell 6.3% and posted 13.03 million mt as of May 7, after a decline of 7.6% in the prior week.

On a yearly basis, overall inventories were 53% higher as of May 7, following a buildup of 62.7% last week.