SHANGHAI, Jun 5 (SMM) – Inventories of steel rebar across Chinese steelmakers and social warehouses accelerated their declines this week as in-plant stocks posted faster drops on the backdrop of traders stockpiling.
Traders stepped up purchases from steel mills after depleting their stockpiles over the past two weeks. Continuous rally in raw materials prices lifted market prospects for steel prices and this also facilitated the procurement by traders.
Social inventories of rebar shrank at a steady pace this week as shipments from social warehouses improved while cargoes were moved from steel mills to social warehouses.
The decline in overall inventories this week remained smaller than the weekly average decline in May, as seasonality deterred the release of construction demand in June. Rainy weather in most southern Chinese regions may continue to slow local construction work next week.
SMM expects an improvement in the weather in the second half of June to lead to ramped-up operations at end-users and faster drops in rebar inventories. This will likely see overall rebar stocks falling to levels of the same period last year by end-June or early-July.
According to SMM data, rebar inventories across social warehouses stood at 7.09 million mt as of June 4. This was down 4.9%, or 366,300 mt, from May 28, compared to a decline of 381,100 mt, or 4.9% last week.
Inventories at Chinese steelmakers shrank 7.1% on the week and stood at 2.78 million mt, the 13th consecutive week of decline, after dipping 0.1% in the previous week.
Overall inventories of rebar, including stocks across steelmakers and social warehouses, fell 5.5% and posted 9.87 million mt as of June 4, after a decline of 3.5% in the prior week.
On a yearly basis, overall inventories were 30% higher as of June 4, following a buildup of 35.9% last week.
