China's retail steel stocks decline on firm sales

Chinese traders saw their inventories of steel at hand decline further over April 23-29 as business throughout this month remained steady, new Mysteel data shows. But market sources warned that the pace of stocks digestion may wane a little early next month from the disruption caused by the coming Labour Day holiday over May 1-5.

The inventories of rebar, wire rod, hot-rolled coil, cold-rolled coil (CRC) and medium plate held by among traders which Mysteel monitors in 132 cities decreased by 1.4 million tonnes or by 5.5% on week to total 24.5 million tonnes as of April 29, as against the on-week decline of 1 million tonnes or 3.8% in the previous period, according to the latest stocks survey.

Among the five items, only the traders' stocks of CRC increased over the period, rising by a mere 13,200 tonnes on week to reach 1.8 million tonnes, the survey showed, mainly due to the softening demand as domestic automobile manufacturing was affected by the semiconductor shortage.

At the same time, the inventories of rebar and wire rod continued trending down at a fast pace, falling by 955,800 tonnes and 361,700 tonnes on week to reach 12.8 million tonnes and 4.3 million tonnes respectively, as of April 29.

"The trading over the coming short vacation might soften for a short while, but the overall demand for May is expected to remain stable and further declines in stocks are foreseeable," a Shanghai-based analyst said.

The daily trading volume of rebar, wire rod and bar-in-coil among the 237 traders Mysteel canvasses across China averaged 256,254 tonnes/day over April 23-28, still a very high level despite being down 1.3% on week, Mysteel's survey showed.

The steel prices quickly increased amid the stable demand and continuous erosion of stocks, with China's price of HRB400E 20mm dia rebar climbing Yuan 138/tonne ($21.3/t) on week as of April 29 to reach Yuan 5,230/t including the 13% VAT.

"The declining demand is a stimulus for prices, but not the major one," the analyst commented. "The market's anticipation of potential declines in production lent rather strong support to prices," he added.

The inventories of finished steel products traders held in Mysteel's former smaller sample across just 35 cities also declined by 986,100 tonnes on week to 16.2 million tonnes as of April 29.

Written by Anna Wu, wub@mysteel.com

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