China's retail steel stocks continue to decline

Total stocks of five major finished steel products held by the Chinese trading houses Mysteel monitors regularly decreased for the eighth consecutive week over September 17-23, falling by 2% or 451,000 tonnes on week, as steel demand in the spot market continued gradually firming with the approach of autumn and the parallel uptick in construction activity.

As of September 23, total inventories of the five major products comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate held by surveyed traders in the 132 cities under Mysteel's tracking had hit a three-month low of 21.7 million tonnes.

During the survey period, all five finished steel products showed on-week drops in their stocks, among which rebar dwindled the most, falling by 355,200 tonnes to 10.3 million tonnes, followed by wire rod and medium plate, with their volume slipping by 48,100 tonnes and 36,200 tonnes respectively on week to settle at 3.2 million tonnes and 2.3 million tonnes.

Production of the five steel products continued dropping for the third straight week over September 16-22 and more sharply by 6.2% or 609,100 tonnes on week, refreshing its new low of 9.2 million tonnes since late March 2020, according to Mysteel's database, reflecting the fact that many domestic mills have been obeying strict government instructions to reduce production.

China's steel prices have strengthened on support of lower steel production. The country's national price of HRB400E 20mm dia rebar for example, under Mysteel's assessment, refreshed its four-month high of Yuan 5,754/tonne ($890/t) and including the 13% VAT as of September 22, or up Yuan 197/t on week.

Meanwhile, inventories of these five steel products in Mysteel's former smaller sample across the 35 Chinese cities declined for the eighth week as of September 23, down by 2.1% or 296,500 tonnes on week to reach 13.7 million tonnes, a new low since February 5 this year.

Written by Rong Zhang, zhangronga@mysteel.com

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