China Rebar Inventory Shrank 261,800 mt on Week

SHANGHAI, Nov 12 (SMM) - The inventory of rebar across Chinese steel makers and social warehouses stood at 7.64 million mt as of November 11, down 261,800 mt or 3.3% from a week earlier. Stocks are 90,900 mt or 1.2% higher from a year earlier.

The inventory at Chinese steel makers increased 53,000 mt or 1.9% from a week earlier, and stood at 2.89 million mt. And stocks are 401,000 mt or 16.1% higher than the same period last year. 

The in-plant inventory increased more slowly from a week ago. The spot prices in north China dropped significantly, and downstream demand also weakened amid extreme weather, resulting in slightly rising inventory. Meanwhile, some steel mills in Shanxi said that they will mostly reduce their output if the profits keep shrinking. Hence, the follow-up inventory in north China will face less pressures. The demand in east China has been modest, and some traders in mainstream cities reports tight supply and insufficient supply of products with certain specification. Thus the local inventory rose much slowly compared with last week. The transaction in south China improved greatly from a week ago, and the downstream actively purchased on dips, pushing the originally rising inventory to the downward trajectory.

The inventory at social warehouses declined 314,800 mt or 6.21% on the week and stood at 4.75 million mt, down 310,200 mt or 6.1% from a year ago. 

The social inventory dipped more significantly from a week ago, but the situation diverged by region. The social inventory in east China declined the most. The market supply dropped, and terminal demand performed moderately. While the traders in north China actively sold off, leading a palpable declines in social inventory. While the terminal demand in north-east China shrank drastically, resulting in slight increase in social inventory.

The apparent consumption of construction steel picked up this week, boosting market confidence. On the supply side, the slumping spot prices have fallen below the break-even point of most steel mills, thus some mills in east and north China are planning to reduce their output. And the output may decline further should the profits continue to fall. Hence, the follow-up supply will remain at a low level or even drop to some point.

On the demand side, the downstream demand was sluggish ahead of the winter and amid resurging COVID, which is likely to stay weak in the short term. In general, the near-term construction steel prices may gain some support from unchanged demand and shrinking supply. And the inventory may keep falling in the short term.