China's retail steel stocks hit 9-month low
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Mysteel: China's retail steel inventories have been progressively shrinking since mid-July, and the downward trajectory continued this week, Mysteel's latest survey revealed. Stocks of the five major steel items held by Chinese traders witnessed a decline in tonnage, which thinned by 6.3% w-o-w over 20-26 September to hit a nine-month low, last seen at the end of last December. Steel trading activities appeared firm ahead of next week's National Day holidays, spanning 1-7 October, sources said.
As of Thursday, the inventories of rebars, wire rods, hot-rolled coils, cold-rolled coils, and medium plates at trading warehouses in the 132 cities nationwide that Mysteel monitors had decreased by around 1 million tonnes (mnt) w-o-w to reach 15.1 mnt.
The decline in traders' stocks was mainly thanks to some replenishment needs among end-users and higher spot sales after Beijing rolled out a suite of policies aimed at reviving the economy. The resulting buoyant market sentiment saw the daily trading volume of construction steel, comprising rebars, wire rods, and bar-in-coils, among 237 trading houses across the country jump by 17.8% or 19,872 tonnes (t)/day w-o-w to 131,587 t/d over 19-25 September.
"The inventories of construction steel products held by traders in Shandong province (in East China) sit at a five-year low of 277,700 t as of today," a source in that region said on Thursday. "Shortages of products in some specifications have become a common phenomenon, as most local mills are keeping their production relatively low, given that profit margins are still thin," he explained.
Work on most construction projects in the province will proceed normally during the weeklong holiday break, the source predicted. "Retail stocks will persist at a low level after the holiday," he added.
Bullish sentiment also saw Chinese steel prices move up during the week. As of 25 September, China's national price of HRB400E 20 mm dia rebars, as assessed by Mysteel, touched a two-month high of RMB 3,462/t ($493/t), including 13% VAT, higher by RMB 103/t w-o-w.
Meanwhile, as of Thursday, inventories of finished steel products held by traders in Mysteel's smaller sample across 35 cities declined by 7.2% or 707,900 t w-o-w to 9.1 mnt, the lowest so far this year.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.