[SMM Construction Material Inventory] Off-Season Impact Stands Out, Inventory Remains at a Persistently Low YoY Level

This week, construction material market inventory slightly decreased, with total inventory down by 28,000 mt, mainly driven by destocking in social inventory. In-plant inventory decreased by 40,400 mt this week, while social inventory saw a slight buildup. Supply side, steel prices remained low, steel mill profits were poor, and routine winter maintenance further suppressed overall construction material production, which stayed at a low level. Demand side, as time passed, the number of suspended and completed projects increased, downstream purchasing demand further weakened, market expectations for the coming year were pessimistic, and winter stockpiling willingness was insufficient. Priority was given to clearing existing inventory, and winter stockpiling was approached cautiously, leading to an accumulation in steel mill in-plant inventory this period.

This week, total rebar inventory stood at 3.7122 million mt, down by 28,000 mt WoW, a 0.75% decrease MoM, and a 36.75% decrease YoY based on the lunar calendar.

Table-1: Overview of Rebar Inventory

Source: SMM

This week, rebar in-plant inventory reached 1.2098 million mt, with an inventory buildup of 13,200 mt WoW, up 1.10% MoM, and down 35.29% YoY based on the lunar calendar. Regarding in-plant inventory, both profits and shipments were unsatisfactory. Steel mills maintained low production levels, while traders showed low willingness for winter stockpiling and were reluctant to purchase, leading to a passive buildup in in-plant inventory.

Chart-1: Rebar In-Plant Inventory Trends, 2020-2024

Source: SMM

This week, rebar social inventory was 2.5024 million mt, down by 41,200 mt WoW, a 1.62% decrease MoM, and a 37.44% decrease YoY based on the lunar calendar. Supply side pressure was not strong, and most traders showed weak willingness for winter stockpiling, with some even planning to maintain zero inventory through the winter. As a result, social inventory only saw a slight decrease this week.

Chart-2: Rebar Social Inventory Trends, 2020-2024

Source: SMM

Looking ahead, raw material prices for iron ore and coke are expected to continue weakening, while steel prices may see slight improvement driven by macroeconomic meetings, potentially offering some room for improvement in per-ton profits of finished steel. However, the off-season impact remains significant, and demand for construction steel is unlikely to expand before the year-end. Coupled with generally low winter stockpiling willingness and limited steel sales, the supply and demand weakness may lead to a gradual inventory buildup in construction materials.