SHANGHAI, Mar 26 (SMM) – Inventories of rebar across Chinese steelmakers and social warehouses stood at 16.53 million mt as of March 25, down 4.51% from a week ago. From the time dimension of the lunar calendar, stocks are down 23% from a year earlier. With the rapid recovery of end-user demand, China steel rebar inventory posted faster decrease, which was significantly lower than the same period last year. However, it is still 3 to 4 million mt higher than the level of the same period in 2018-2019.

Inventories at Chinese steelmakers fell 259,900 mt on the week and stood at 5.09 million mt. From the time dimension of the lunar calendar, stocks are down 4.86% from a week ago and down 32.6% from a year earlier. 

In-plant stocks posted faster decrease this week, and the rate of decline expanded 1.84%. On the one hand, output met many obstacles to continue to rise. Although the blast furnace and electric furnace plants had strong production willingness, operating rate declined as steel billet prices rose rapidly under the Tangshan environmental protection production restrictions. Even in eastern and northern China, billet prices exceeded the prices of finished products of some local manufacturers. On the other hand, rebar contracts experienced a short-paced "bottom-out rebound", which stimulated speculative demand amid active market trading, and speeded up the transmission efficiency from in-plant stocks to social stocks.

Inventories at social warehouses fell 520,500 mt on the week and stood at 11.45 million mt, down 4.35% from a week ago and 17.8% lower from a year ago. The week-on-week decline expanded 2.49 percentage points from the previous week. Recently, the rainy weather in East China and other places significantly reduced, and end-user demand gradually released, resulting in an increase of 2.49 percentage points from the previous week in the rate of decline of social stocks.

Since mid-to-late March, the end-user rigid demand of the rebar has been continuously recovering, and the incremental room on the supply side has been continuously compressed due to environmental protection production restrictions, quality inspection offices and other factors. Stocks will post faster decrease in the following weeks. However, as of now, inventory pressure still exists, demand release is still disturbed by capital pressure, spot prices are under pressure, and the contract is likely to keep fluctuating in the near term.