China mills' steel stocks increase marginally on thin demand

Inventories of the five major carbon steel products comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate at the 184 Chinese steel mills under Mysteel's survey began increasing again over January 13-19 after the short-lived decrease during the prior week, as domestic demand shrank further with the Chinese New Year holiday over January 31-February 6 looming.

Total inventories of the five steel items increased by 42,400 tonnes on week to register 4.24 million tonnes as of January 19, while stocks of wire rod and rebar were still trending downwards due to the substantial fall in mills' output, the survey showed.

Over January 13-19, total production of the five major steel items among the sampled steel mills reached 9.1 million tonnes, posting an on-week fall of 2.6% or 245,800 tonnes after the continuous growth over the prior three weeks. Among the total, the tonnage of rebar and wire rod dropped the most sharply - by 208,000 tonnes and 84,200 tonnes on week respectively - as many mini-mills in eastern and southern China had conducted maintenance or halted production ahead of the CNY break.

Trading activity in the physical market tapered off further this week as more end-users have closed their businesses to celebrate the most important festival in China. The domestic market was already expected to quieten next week but now this seems certain as widespread rain and snow are forecast, Mysteel Global noted.

Daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil among the 237 Chinese traders under Mysteel's regular survey, for example, slipped continuously to 80,649 tonnes/day on average over January 13-19, lower by another 54,044 t/d or 40% from the previous week.

Over January 14-20, inventories of these five steel products at commercial warehouses in the 132 Chinese cities under Mysteel's survey climbed at a faster pace of 6.6% on week to 15.03 million tonnes, as against the on-week rise of 2.9% over the prior week, reflecting the shrinking demand, according to the survey.

However, "the accumulation in mills' and traders' stocks was lower than the market had expected, compared with the same period last year, and this lent some support to domestic steel prices," a market source in Shanghai said.

For example, the national price of HRB400E 20mm dia rebar was assessed by Mysteel at Yuan 4,798/tonne ($756/t) including the 13% VAT as of January 20, gaining another Yuan 21/t on week.

Written by Nancy Zheng, zhengmm@mysteel.com
This article has been published under an exchange agreement between Mysteel Global and SteelMint.