SHANGHAI, Sep 18 (SMM)—Inventories of steel rebar across Chinese steelmakers and social warehouses accelerated their declines this week, but the weekly average stock decline in September only stood at 80,000 mt, far lower than the 416,000 mt in the same period last year, as steel mills kept high production in this high season. Besides, current production profits for EAF and BF mills will limit falls in output, and end-user demand is unlikely to improve significantly as end-users face issues such as tight cash flows, which will keep rebar inventories at high levels in the near term, weighing on its prices.
However, improved fundamentals, cost support and stockpiling demand before the National Day holiday will limit downward space for rebar prices.
Rebar inventories at Chinese steelmakers
The drop in in-plant rebar inventories shrank sharply by 2.8 percentage points this week as falling rebar futures drove up cautious sentiment in the market. Besides, medium and high-level inventories at sellers and distributors dampened their willingness to restock.
Rebar inventories across social inventories
Rebar inventories across social inventories started to fall this week. End-user demand still missed expectations, but it is improving gradually. Steel mills and traders in some regions such as southwest China reduced prices to close deals, a move to lower inventories. Especially during September 11-14, demand surged as rebar futures showed signs of strengthening, which accelerated the decline in social inventories.
SMM data showed that overall rebar inventories across Chinese steelmakers and social warehouses fell 1.3% from the previous week to 11.34 million mt as of September 17, but remained 51.9% higher than a year ago.
Inventories at steel mills shrank 13,100 mt or 0.4% on the week to 3.36 million mt, but were 52.3% higher than a year earlier.
Inventories across social warehouses fell 133,100 mt or 1.6% week on week, but rose 51.8% year on year, to 7.98 million mt as of September 17.
