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China Rebar Inventory Shrank 36,400 mt on Week
Nov 5,2021 11:00CST
Source:SMM
The inventory of rebar across Chinese steel makers and social warehouses stood at 7.9 million mt as of November 4, down 36,400 mt or 0.5% from a week earlier. Stocks are down 569,700 mt or 6.7% from a year earlier.

SHANGHAI, Nov 5 (SMM) - The spot prices of rebar fell by over 9% on the week, and the futures prices dropped by over 300 yuan/mt. Many producers lowered the prices significantly to promote the sales with amid the intensifying panic in the market.

However, the demand of steel weakened sharply due to the contracting real estate market, and end users also held a wait-and-see stance after the spot prices dropped. The extreme weather and the recurrence of COVID-19 pandemic in some regions suppressed the demand as well. The apparent demand fell by 3.4% on the week.

The blast furnaces in some northern regions resumed the production this week, and the steel mills kept production at nearly full capacity in south China. However, the spot prices have fallen below the break-even point in some regions, which restricted the production. The heating season in north China also caused some steel mills to shut down the blast furnaces. The overall supply stood largely unchanged this week.

The inventory of rebar across Chinese steel makers and social warehouses stood at 7.9 million mt as of November 4, down 36,400 mt or 0.5% from a week earlier. Stocks are down 569,700 mt or 6.7% from a year earlier.

The inventory at Chinese steel makers increased 208,000 mt or 7.9% from a week earlier. And stocks are 92,800 mt or 3.4% higher than the same period last year.

The in-plant inventory increased more significantly this week. The in-plant inventory in north China declined as the steel mills conducted the staggered production under the environmental protection inspections for the heating season, and the output fell sharply. Some steel mills in east China suspended the EAF production as the spot prices fell to near the break-even point. The steel mills in south China basically maintained the production at full capacity, and the stocks in the plants increased significantly.

The inventory at social warehouses declined 244,400 mt or 4.6% on the week and stood at 5.07 million mt, down 662,500 mt or 11.6% from a year ago.

The decline in the social inventory narrowed on the week amid the varied demand by region. The stocks in east China fell the most significantly as the plunging spot prices boosted the end purchase, and some new projects increased the steel demand. The inventory in north China dropped sharply as well amid increased purchase. The output in south China increased markedly, and the social inventory was little changed. The demand in central China was sluggish, and there were few transactions.

Despite the alleviated restrictions on the production, the plummeting spot prices squeezed the profits of EAF mills, forcing some mills to suspend the production. The operating rates of EAF are expected to stand low. The demand in central and north China remained low, while the demand in east china improved significantly, where the transactions were robust. More steel mills may suspend the production in north-east China near winter, while the demand in east and south-west China may stay resilient as most of the end users will ramp up the production in the end of the year. The social inventory of rebar is expected to decline further but more slowly due to the recurrence of pandemic.

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