China: Stronger sales keep traders' steel stocks on downtrend

Steel demand across China is staying generally stable, a trend underscored by the prolonged downtrend seen in the stocks volume of five major steel items held by traders. Bolstering market confidence is new data showing the volume held by traders over October 30-November 5 had thinned by 5.9% on week and lower for a fourth straight week, Mysteel Global noted.

Mysteel's latest weekly stocks survey showed that inventories of the five products had declined by another 1.16 million tonnes on week to 18.3 million tonnes as of November 5, as against the 1.19 million tonnes on-week drop in the prior period. The five items comprise rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate.

Behind the steadily decreasing stocks was the further uptick in the traders' business, with the trading volume of rebar, wire rod and bar-in-coil among 237 traders Mysteel surveys up 4.1% on week to average 252,381 tonnes/day over October 29-November 4, according to another Mysteel survey.

This was against slightly higher steel production, as the total output of the five items among the 184 steelmakers monitored by Mysteel rose further by 23,800 tonnes on week to reach 10.7 million tonnes over October 29-November 4.

In the inventory data for the five products, stocks of rebar declined the most, falling by 780,800 tonnes or 8.1% on week to 8.9 million tonnes as of November 5. Second to rebar was wire rod, where total stocks fell by 194,300 tonnes or about 7.9% on week to reach at 2.3 million tonnes as of the same day, the survey showed.

"The firmness of finished steel prices has given a large fillip to sentiment. The steelmakers are still earning some profits though their margins have narrowed. That's because raw materials prices have increased at an even faster pace than steel prices," a Shanghai-based analyst said.

As of November 4, China's HRB400 20mm dia rebar price as assessed by Mysteel had gained Yuan 91/tonne ($13.7/t) on week to reach Yuan 3,916/t including the 13% VAT. But tempering the steelmakers' delight at the higher bar prices has been the success of independent coking plants in North and East China at winning higher prices for their coke - their sixth rise since mid-August and taking the total increase to Yuan 300/t, as reported.

Meanwhile, steel inventories held by traders in Mysteel's former smaller sample across just 35 cities had declined by 791,200 tonnes on week to 12.3 million tonnes as of November 5.

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