SHANGHAI, Apr 2 (SMM) – Inventories of rebar across Chinese steelmakers and social warehouses stood at 15.59 million mt as of April 1, down 5.7% from a week ago. Stocks are down 16% from a year earlier.

Both the social stocks and in-plant stocks posted faster decline on week mainly due to the continuous recovery of demand from the real estate and infrastructure industries.

Inventories at Chinese steelmakers fell 431,500 mt on the week and stood at 4.66 million mt. Stocks are down 8.5% from a week ago and down 19.8% from a year earlier. 

In-plant stocks decreased sharply this week, end-user demand continued to recover with improved speculative demand, which continued to suppress the rebound in output. On the one hand, Tangshan environmental protection made new measures to limit production. The ratings of some steel mills have been downgraded, and the proportion of production restrictions will also be adjusted in response. On the other hand, although the profitability of rebar is still high, it is lower than other common varieties such as plates and strips. Steel mills are more willing to produce other varieties. In addition, the strong billet prices still suppressed the finished product output of billet steel mills.

Inventories at social warehouses fell 515,000 mt on the week and stood at 10.93 million mt, down 4.5% from a week ago and 14.2% lower from a year ago. SMM's March end-user survey data showed that about 84% of the end-user sample companies returned to normal construction. However, considering the excessively high prices of raw materials, most companies currently maintained the pace of on-demand procurement, which also led to the stable decline of the social stocks.

Rebar inventories are on the declining trend, but pressure on inventories by fundamentals and market sentiment is limited. Supply side is likely to remain stable, while demand is still expected to improve on the back of limited impact on environmental restrictions and operating rates of blast furnaces and electric furnaces at optimal levels. Fundamentals of the rebar are likely to remain stable, and rebar prices will continue to fluctuate in April.