SHANGHAI, Jul 31 (SMM) – Inventories of steel rebar across Chinese steelmakers and social warehouses extended their increases as expected this week as supply picked up and demand has not completely shaken off the impact of the wet season. 

The buildup in rebar stocks at steel mills slowed down this week as the shipments from plants to social warehouses recover after floods wind down. Meanwhile, production at steel mills expanded and downstream demand failed to improve markedly as the rainy season impact lingered in some regions. This sustained the inventory increase at steel plants. 

An SMM survey showed that the operating rates across 34 independent EAF steel mills in China stood at 81.27% as of July 28, up 2.72 percentage points from a week ago and up 3.54 percentage points from the same period a month earlier. The operating rates of blast furnaces at Chinese steelmakers rebounded 0.23 percentage point in the last week of July, to an average 90.3%.

China’s in-plant inventory of rebar in 2016-2020

Inventories at social warehouses maintained stable growth this week, on the back of accelerated deliveries from steel mills. 

China’s social inventory of rebar in 2016-2020

SMM expects spot rebar prices to remain rangebound in the short term given support from raw materials costs and bullish prospects for demand and downward pressure from elevated inventories. 

According to SMM data, rebar inventories across social warehouses stood at 7.69 million mt as of July 30. This was up 1.2%, or 88,900 mt, from July 23, slightly slowing from a rise of 95,300 mt, or 1.3%, last week. 

Inventories at Chinese steelmakers grew 3.2% on the week and stood at 3.46 million mt, following an increase of 3.5% in the previous week. 

Overall inventories of rebar, including stocks across steelmakers and social warehouses, rose 1.9% and posted 11.14 million mt as of July 30, after a build of 1.8% in the prior week.

On a yearly basis, overall inventories were 26.9% higher as of July 30. The stocks were 28.1% higher year on year last week.