SHANGHAI, Jul 17 (SMM) – Inventories of steel rebar across Chinese steelmakers and social warehouses continued to climb this week, as markets in central, east and south-west China have not shaken off the impact of the rainy season. But consumption in south China saw a resurgence as the wet season ends, which is strong evidence of local stepping-up construction work.
The construction demand has been more urgent as compared with the previous year, and this narrowed the year-on-year increase in overall rebar inventories, by 3 percentage points this week.
Inventories at social warehouses accelerated increase this week, as improved prospects for near-term prices prompted traders to restock, which facilitated the shipments from steel plants to social warehouses. A broad rally in the stock market had boosted rebar futures, which traded robustly over nearly the past two weeks.
China’s social inventory of rebar in 2016-2020
Stocks at steelmakers fell for the second consecutive week, on the backdrop of a decline in production amid inventory pressure and poor profits at plants. More steel plants have planned for maintenance.
An SMM survey showed that the planned output of rebar across China’s major blast furnace steelmakers in July decreased by 2% from the realised production in June to 9.07 million mt. As of July 14, the operating rates of EAF steel mills in China were 7.59 percentage points lower than that on June 11.
China’s in-plant inventory of rebar in 2016-2020
SMM expects the buildup of China’s rebar inventories to continue in the near term as the wet season impact on consumption lingers. Rebar prices may regain some upward momentum in the weeks ahead when demand in more areas returns after the rainy season.
According to SMM data, rebar inventories across social warehouses stood at 7.5 million mt as of July 16. This was up 2.4%, or 173,700 mt, from July 9, accelerating from a rise of 135,900 mt, or 1.9% last week.
Inventories at Chinese steelmakers edged down 3.3% on the week and stood at 3.24 million mt, after the stocks falling 1.8% in the previous week.
Overall inventories of rebar, including stocks across steelmakers and social warehouses, grew 0.6% and posted 10.74 million mt as of July 16, after a build of 0.7% in the prior week.
On a yearly basis, overall inventories were 29.2% higher as of July 16. The stocks were 32.2% higher year on year last week.
