SHANGHAI, Jun 12 (SMM) – Declines in inventories of steel rebar across Chinese steelmakers and social warehouses slowed down this week as the rainy season deterred purchases and deliveries to consumers.

However, the overall stocks continued to post smaller builds from the same period a year ago, pointing to strength in downstream demand. The continued downtrend in overall inventories and greater output as compared with a year earlier also suggested that current consumption surpassed the level of the same period last year.

Rebar inventories across steel mills rebounded this week, following 13 consecutive weeks of slide, as production stayed at highs while the rainfall dampened construction demand and affected shipments from steel plants. 

The continuous rainy days in south and central China postponed the purchases by construction sites, leading to a significant slowdown in inventory draw at social warehouses this week. Rebar futures on the SHFE moderated this week, adding to cautious sentiment in the market, which also accounted for the slower drop in rebar inventories. 

SMM expects the decline in overall rebar stocks unlikely to regain pace in the near term as the rainy weather in south and central China will continue and temperatures climb in north China. Expectations of weakened trades, together with some cash-in demand at traders, may see spot rebar prices pulling back slightly next week. 

According to SMM data, rebar inventories across social warehouses stood at 6.93 million mt as of June 11. This was down 2.3%, or 164,600 mt, from June 4, slowing from a decline of 366,300 mt, or 4.9% last week. 

Inventories at Chinese steelmakers edged up 0.4% on the week and stood at 2.79 million mt, after the stocks dipping 7.1% in the previous week. 

Overall inventories of rebar, including stocks across steelmakers and social warehouses, fell 1.6% and posted 9.72 million mt as of June 11, after a decline of 5.5 % in the prior week.

On a yearly basis, overall inventories were 24.7% higher as of June 11, following a buildup of 30% last week.