SHANGHAI, Nov 19 (SMM) – China steel rebar inventories continued to fall this week as the demand in Northeast China has gradually weakened due to the cold weather, and the release of some end-user demand in some other markets (such as Hubei) has been affected by intermittent rainfall.
Inventories of rebar across Chinese steelmakers and social warehouses stood at 6.84 million mt as of November 19, down 9.5% from a week ago and up 47.5% from a year earlier.
According to SMM data, inventories at Chinese steelmakers fell 121,100 mt on the week and stood at 2.37 million mt, down 4.9% from a week ago and up 23.6% from a year ago.
The decline of in-plant stocks narrowed significantly this week. In addition to the slight weakening of demand, it was mainly due to the weak performance of rebar contracts, which depressed the sentiment of the spot market. As winter approached, prices have continuously increased to a high level. National average prices of rebar spot have increased 327.3 yuan/mt as of November 19, and the market has become more cautious about the market outlook, and the enthusiasm for getting goods from steel mills has declined, dragging down the decline of in-plant stocks.
Inventories at social warehouses fell 593,600 mt on the week and stood at 4.47 million mt, down 11.7% from a week ago and 64.4% higher from a year ago.
Social inventories of rebar continued to trend lower steeply this week, and sellers are more willing to ship goods and lower the inventories as the market is becoming cautious on the mid-term outlook. In addition, except for Northeast China, South China, East China and Hebei still have the increased demand to complete their work, and the release of end-user demand is still relatively positive, and the reduction speed of social stocks will become more stable.
Under the irresistible seasonal factors, the overall demand for rebar has shown signs of weakening, and the market has a stronger expectation of weakening fundamentals. The driving force for the spot price to continue to rise is weakening or even disappearing gradually. However, fortunately, steel mills have turned into maintenance recently, and it is not common for some steel mills to turn to rebar production. The supply increment has not yet fully reached the market and supply is still tight in most areas of China, so the spot prices still have some support for the time being, and prices are expected to keep a narrow range of fluctuation in the near term.
