[SMM Construction Steel Inventory] As Weather Warms, Will the Decline in Construction Steel Inventory Accelerate?

Construction steel total inventory declined for the third consecutive week, with a larger drop compared to the previous two weeks. Rebar total inventory decreased 2.02% WoW, and wire rod inventory fell 5.63% WoW. Supply side, BF and EAF steel mill operations diverged this week. With the conclusion of a major conference, some blast furnaces that were previously restricted due to environmental protection requirements resumed production. Coupled with moderate profitability, long-process steel mills increased their production enthusiasm, leading to an increase in pig iron production. Short-process steel mills, however, saw a significant reduction in overall benefits due to falling finished product prices, mainly operating at flat valley electricity. Demand side, downstream demand is currently moderate, with a strong wait-and-see sentiment in the market. Given the weak futures trend, merchants mostly opted for price cuts to destock. This week, rebar total inventory was 781.46 million mt, down 16.08 million mt from last week, a decline of 2.02% (previous: -0.74%), and 355.45 million mt lower YoY, a YoY decline of 31.26% (previous: -33.81%). Table 1: Overview of Rebar Inventory Data Source: SMM This week, rebar in-plant inventory was 220.52 million mt, down 6.84 million mt from last week, a WoW decline of 3.01% (previous: -1.5%), and 126.02 million mt lower YoY, a YoY decline of 36.36% (previous: -40.54%). Currently, direct supply from steel mills is relatively stable, and in-plant inventory has decreased. Chart-1: Rebar In-Plant Inventory Trends 2020-2025 Data Source: SMM This week, rebar social inventory was 560.94 million mt, down 9.24 million mt from last week, a WoW decline of 1.62% (previous: -0.44%), and 229.44 million mt lower YoY, a YoY decline of 29.03% (previous: -30.68%). The weak futures trend this week led to a strong wait-and-see sentiment in the market, and merchants mostly chose to cut prices to destock. Chart-2: Rebar Social Inventory Trends 2021-2025 Data Source: SMM Overall, downstream demand is still recovering, but it is constrained by financial conditions, and the recovery is below expectations. As the weather warms up, the operating rates of infrastructure projects and the real estate market are expected to further improve, and construction steel demand will continue to be released. It is expected that next week, construction steel inventory will continue to destock, and the destocking magnitude will also expand.