SHANGHAI, Mar 5 (SMM) – Inventories of rebar across Chinese steelmakers and social warehouses stood at 17.35 million mt as of March 4, up 6.56% from a week ago. From the time dimension of the lunar calendar, stocks are down 4.4% from a year earlier. Supply recovered simultaneously following the demand, and long steel inventories continued to accumulate this week.
Inventories at Chinese steelmakers rose 169,300 mt on the week and stood at 5.41 million mt. From the time dimension of the lunar calendar, stocks are up 3.23% from a week ago and down 23.7% from a year earlier. In-plant stocks increased slightly this week.
On the one hand, profits expanded and production continued to rise. According to SMM survey, operating rates of 34 independent electric arc furnace steel plants that mainly produce building materials stood at 79.09% as of March 3, which basically rebounded to the normal level before the holiday. Operating rates of blast furnaces also rebounded by 0.9 percentage point from last week. In-plant stocks flow became larger. On the other hand, the national average prices of spot rebar increased by 391.8 yuan/mt after the holiday, and the rebar contracts repeatedly exceeded the new high in the past ten years. The market fear of high prices began to ferment again, merchants' willingness to restock decreased, market trading gradually turned to wait-and-see, and the transmission efficiency from in-plant stocks to social stocks decreased.
Inventories at social warehouses rose 898,500 mt on the week and stood at 11.94 million mt, up 8.14% from a week ago and 7.9% higher from a year ago. With the continuous recovery of end-user demand, the week-on-week growth rate narrowed 16.44 percentage points from last week.
Driven by high profitability, the rate of recovery of rebar production this year was significantly faster than in previous years. As a result, the inventory accumulation scale is also in the upper range of the conventional level in previous years. The inventory scale has reached a historical high except for the last year. It is expected that there will be a small accumulation next week and supply pressure does exist. However, on the one hand, demand was affected by wet weather in the near term, but it was ready to increase. With the expected year-on-year growth in demand for infrastructure steel this year, the pressure brought by inventory will have little impact. On the other hand, the market's tolerance for inventories is greatly improved after experiencing last year’s high inventories. Therefore, high inventories can only suppress the rise of spot prices, which will not drag down prices.
