SHANGHAI, Aug 21 (SMM) —Inventories of steel rebar across Chinese steelmakers and social warehouses built up this week on curbed end-user demand and dampened market sentiment.
Rebar inventories across Chinese steelmakers continued to expand as unstable macroeconomic environment kept buyers cautious about stockpiling. However, market sentiment was boosted earlier in the week when futures contracts surged, and this slowed the increase in in-plant inventories.
Social inventories increased as well this week as heavy rainfalls in Hebei and Sichuan curbed local demand. In addition, rebar futures contracts performed poorly on the backdrop of mounting tensions between the US and China. End-users stood on the sidelines and awaited lower prices, while traders and distributors who made losses or tried to break even were reluctant to sell at low prices.
SMM data showed that overall inventories of rebar stood at 11.3 million mt as of August 20, up 1.3% from the prior week and 28.2% from a year ago.
In-plant rebar inventories rose 1.3% on the week to 3.52 million mt this week, and this was 38.6% higher than a year ago.
Rebar inventories across Chinese steelmakers (Source: SMM)
Rebar stocks across social warehouses expanded 106,000 or 1.4% on the week to 7.78 million mt, rising 24% on the year.
Rebar inventories across social warehouses (Source: SMM)
Demand is unlikely to return rapidly to normal levels in the near term given the heavy rainfalls in some regions and the high-temperature weather, SMM estimates. However, thin profits prompt steelmakers to hold prices firm, limiting the downward space for rebar prices.
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