China mills' steel stocks rise on demand-supply mismatch

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 continued to grow at a faster pace of 1.3% on week over December 30-January 5, against the on-week rise of 0.7% during the prior week. Survey participants said this was due to the further recovery in mills' production and the overall weak demand from end-users.

Total inventories of the five steel items came in at 4.26 million tonnes as of January 5, up another 54,400 tonnes from one week earlier, the survey showed.

Over December 30-January 5, total production of the five major steel items among the sampled steel mills registered 9.28 million tonnes, up for the second week by another 2.6% on week.

"The further growth in mills' production was within market expectations as more domestic mills resumed normal operation in January after successfully achieving the targeted reduction in production in 2021," a market source in Shanghai said, adding that the healthy profits also encouraged mills to ramp up production.

Over December 30-January 5, daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil among the 237 Chinese traders under Mysteel's regular survey averaged 150,433 tonnes/day, higher by 4,237 t/d or 2.9% on week, thanks to the replenishment of some end-users.

However, domestic steel demand is expected to remain tepid in the near term as more end-users will gradually suspend operations to prepare their firms for the Chinese New Year holiday over January 31-February 6. Consequently, the accumulation in mills' and traders' steel stocks will continue in the coming term, Mysteel Global noted.

Over December 31-Janaury 6, inventories of these five steel products at commercial warehouses in the 132 Chinese cities under Mysteel's survey reversed up after the continuous fall over the prior 12 weeks, rising by 0.7% on week to 13.7 million tonnes, the survey showed.

Chinese domestic steel prices have been hovering at relatively high levels over the past week, with the national price of HRB400E 20mm dia rebar reaching Yuan 4,741/tonne ($743/t) including the 13% VAT as of January 6, edging up Yuan 7/t from one week before, according to Mysteel's assessment.

Written by Nancy Zheng, zhengmm@mysteel.com

Table 1 Five major steel products stocks at mills (Dec 30-Jan 5)

Table 2 Five major steel products stocks at traders (Dec 31-Jan 6)

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.