SHANGHAI, Oct 22 (SMM) – The power rationing was implemented across the country this week, suppressing the production of the steel mills. The rebar output dropped by 1.4% on the week. The steel demand by the construction industry fell significantly amid the surging costs and capital constraints. The spot transaction was sluggish this week. The apparent demand fell by 14.5% from last week and 42.9% on the year.
The inventory of rebar across Chinese steel makers and social warehouses stood at 8.08 million mt as of October 21, down 204,500 mt or 2.5% from a week earlier. Stocks are down 1.99 million mt or 19.8% from a year earlier.
The steel mills’ output declined this week, but the deliveries were stagnated, leading to a slight increase in the in-plant inventory. Some steel mills in Zhejiang vigorously resumed the production, and the in-plant inventories increased slightly. The output in north China was largely unchanged on the week, but some traders reduced the purchase amid the bearish sentiments, so the in-plant inventory rose as well.
Inventories at Chinese steelmakers increased 70,400 mt or 3.0% from a week earlier. And stocks are 715,700 mt or 22.6% lower than the same period last year.
The inventory decline in the social warehouses slowed down significantly. The inventory in south-west China fell significantly as some local construction sites ramped up the work. The inventory dropped slightly in east China, as some constructions sites also sped up the work near the end of the peak season amid the falling temperature.
The social inventories also declined slightly in north-west, south-west, and central China. Inventories at social warehouses declined 274,800 mt or 4.66% on the week and stood at 5.62 million mt, down 1.27 million mt or 18.5% from a year ago.
The apparent demand of rebar declined significantly this week mainly because the real estate market entered a contraction period. The power supply remains tight, and the production restrictions may continue to tighten across the country, so the supply is expected to stand low. However, the demand stands weak. The price decline stands stable even if the supply is shrinking. The steel prices will lack the upward momentum unless the market sees the shortage of certain specificationss.
