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China steel rebar inventory posted faster decline on week

iconOct 29, 2020 16:20
Source:SMM
China steel rebar inventories continued to fall sharply this week due to the release of the demand for rushing work since the fourth quarter.

SHANGHAI, Oct 29 (SMM) – China steel rebar inventories continued to fall sharply this week due to the increased demand to complete work in the fourth quarter.

 

China steel rebar inventories has fallen to below 10 million mt for the first time in the second half of the year and hit low levels since Chinese New Year.

 

According to SMM data, inventories at social warehouses fell 573,800 mt on the week and stood at 6.32 million mt, down 8.3% from a week ago and 73.4% higher from a year ago.

 

The decrease of social inventories expanded 2.3 percentage points mainly because of the rush to complete projects before the end of the year across real estate enterprises. In addition, the commencement of infrastructure projects in many provinces and the rigid demand have caused the decline of social inventories.

 

 

Inventories at Chinese steelmakers fell 184,300 mt on the week and stood at 2.99 million mt, down 5.8% from a week ago and up 25.2% from a year ago.

 

The funding issue is more prominent in September and there is an urgent need to rush work and deliver projects since October due to the COVID-19 and they wet season. Combined with the increasing proportion of steel mills' direct shipment, the release of end-users rigid demand plays a more obvious role in promoting the decline of in-plant inventories.

 

The shipping situation is improving with eased macro policies, as well as more news on environmental protection and production restrictions. Some merchants are having positive expectations on prices in the short-term, and are more willing to purchase, leading to the decline of in-plant inventories.

 

 

Inventories of rebar across Chinese steelmakers and social warehouses stood at 9.31 million mt as of October 29, down 7.5% from a week ago and up 54.3% from a year earlier.

 

Under the high-speed decline of stocks driven by demand, the fundamentals of rebar show signs of marginal improvement, and the cost support is firm (according to SMM estimation, the production cost of long-process steel mills has increased about 439 yuan/mt as of October 29 from the same period of last year, and the gross profit per tonne of steel in most steel mills is only about 100 yuan/mt). The short-term support of spot prices is strong, and there is even a possibility of slight rebound.

 

However, how long the good times can last depends on the sustainability of the demand in north China. As seen from previous trends, rebar stockpiling takes place around mid to end November, so a downtrend in rebar prices may be expected over the next month.

 

 

Inventory data
Rebar

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