China Rebar Stocks Down 4.2% on Week

SHANGHAI, Sep 10 (SMM) – Rebar output declined slightly by 2.2% from the previous week in the week ended September 9, mainly due to the power curtailment, fully implemented production cuts, and maintenance. Apparent demand increased by 9.5% on the week.

Inventories of rebar across Chinese steelmakers and social warehouses stood at 10.07 million mt as of September 9, down 468,700 mt or 4.2% from a week earlier, according to SMM data. Stocks are down 788,400 mt or 6.9% from a year earlier.

Rebar output decreased this week, and steel mills accelerated deliveries, leading to a rapid decline in the in-plant stocks. The stocks decreased more significantly in the steel mills in east China, where the demand rebounded more strongly than other regions.

Inventories at Chinese steelmakers decreased 218,600 mt or 6.3% from a week earlier to 3.24 million mt. Stocks are 130,300 mt or 3.9% lower than the same period last year.

Steel prices continued to rise this week, speculative demand broke out, and end demand also recovered to a certain extent. The social inventories dropped most markedly in east China, as the rebar output is highly expected to decline amid frequent news of production cuts, which boosted the speculative sentiments. At the same time, downstream bargain-hunting purchase increased due to the accelerated end construction. The social inventories also declined slightly in south-west, central-west, and north-east China.

Inventories at social warehouses declined 249,800 mt or 3.24% on the week and stood at 7.46 million mt, down 658,100 mt or 8.1% from a year ago.

The total rebar inventory declined smoothly this week amid the implemented production cuts on crude steel and the recovering end demand. Steel supply will remain tight in the second half of the year due to the strict production restrictions, while the apparent demand will increase significantly in the traditional peak season in September and October. The demand recovery varied in regions, and the prices in some regions were still suppressed by the weak demand. However, rebar stocks are expected to fall rapidly in the medium and long term.