SHANGHAI, Jul 24 (SMM) – Inventories of steel rebar across Chinese steelmakers and social warehouses continued to pile up this week as demand has been largely constrained by the rainy season, which is more intense and covers more areas than the previous year. Consumption from areas along the Yangtze River almost stagnated over the past half a month. 

Rainfall-induced floods hit most areas along the Yangtze River, hampering raw materials delivery to steelmakers and shipments of finished products from steel plants. While steel mills that hold feedstock stockpiles were able to maintain stable production, the shipments from steel mills to social warehouses reduced, and this led to faster builds in rebar inventories at steelmakers. 

Stocks at social warehouses posted a slower increase this week as shipments to north and south China recovered as the end of local rainy season allowed the pent-up demand to release. 

SMM expects the buildup in rebar inventories to slow down in the weeks ahead on the back of rising demand. Deliveries from steel mills to social warehouses will also resume as the market normalises after the wet season. 

The spot rebar market will continue to focus on destocking and spot prices may struggle to recover with lingering pressure from inventories. Recovery of demand and firm cost of raw materials will offer some support to spot prices. 

According to SMM data, rebar inventories across social warehouses stood at 7.6 million mt as of July 23. This was up 1.3%, or 95,300 mt, from July 16, slowing from a rise of 173,700 mt, or 2.4%, last week. 
Inventories at Chinese steelmakers grew 3.5% on the week and stood at 3.35 million mt, reversing a drop of 3.3% in the previous week. 

Overall inventories of rebar, including stocks across steelmakers and social warehouses, rose 1.8% and posted 10.93 million mt as of July 23, after a build of 0.6% in the prior week.

On a yearly basis, overall inventories were 28.1% higher as of July 23. The stocks were 29.2% higher year on year last week.