China steel rebar inventory down 6.3% on week amid rising output and less-than-expected apparent demand

SHANGHAI, Apr 16 (SMM) – Inventories of rebar across Chinese steelmakers and social warehouses stood at 13.74 million mt as of April 15, down 6.3% from a week ago. Stocks are down 14.7% from a year earlier.

The contract and spot markets rose in resonance this week. With booming supply and demand, market transactions were vigorous and inventories posted faster increase. In-plant and social stocks posted faster decrease, while it was slightly insufficient compared to the same period last year. The apparent demand for rebar increased 2.16% year on year (previous value 11.71%).

Inventories at Chinese steelmakers fell 162,500 mt on the week and stood at 4.03 million mt. Stocks are down 3.9% from a week ago and down 16.9% from a year earlier. The year-on-year decrease narrowed 5.4 percentage points from last week.

 On the one hand, driven by high profits, steel mills were highly motivated to produce. Despite the continuous disturbance of production restrictions for environmental protection, the national long steel output rebounded to a certain extent. On the other hand, as long steel prices keep high, the operation of sub-agents, middlemen, sub end-user and end-users is difficult next week. Therefore, in-plant stocks posted faster decrease, slightly insufficient compared to the same period last year.

Inventories at social warehouses fell 753,400 mt on the week and stood at 9.71 million mt, down 7.2% from a week ago and 13.8% lower from a year ago. The week-on-week decrease expanded 2.9 percentage points from the previous week. Social stocks posted faster decrease as the contract and spot markets rose in resonance this week with strong market speculative demand amid active trading atmosphere. In addition, merchants still feared of high prices, and they were active to ship goods at high prices. China's infrastructure development is strong, and the demand for steel in important economic development areas is large.

The output of long steel rebounded this week, while the inventories decreased. The boom in production and sales indicated that the downstream rigid demand was relatively considerable. However, the increase in apparent demand this week compared with the same period last year was limited. The main reason was that the upstream, midstream and downstream of the ferrous metal industry chain was affected by cost pressures, which made middlemen's speculation mood weak. Steel inventory continued to post decrease, while if the demand enters the off-season, the pressure on increasing stocks will exceed expectations.