China's Steel Stocks at Traders Decline at a Slower Pace

Inventories of the five major steel items held by traders in 132 cities across China under Mysteel's regular survey continued declining over May 1-7, slipping by 3% on week, Mysteel's latest survey published on May 7 showed. However, the pace of the decline slowed markedly, compared with the 6.5% week-on-week fall in the prior period, chiefly because users had stocked up enough for their short term needs, market sources said.

As of May 7, stocks of the five products, comprising of rebar, wire rod, hot-rolled and cold-rolled coil and medium plate, declined for an eighth straight week by another 845,100 MT or 3% to 27.3 MnT, the survey showed.

Among the five, inventories of rebar and wire rod still witnessed the sharpest declines, dropping by 4.1% and 3.5% on week to 13.8 MnT and 5.2 MnT respectively, according to the survey.

"Downstream demand these days is not bad, but it is obviously weaker than that in the last week of April and on May 1 and 2," a steel trader in South China's Guangdong province said. "That's because users had already stocked up a bit," he added.

Besides, most market players are tending to stay cautious regarding transactions, Mysteel Global understands. They're uncertain about how long demand will stay robust, and there are still questions about the likelihood of steel production rising some more, especially when stocks are still much higher on year.

"We are controlling our stocks at a comparatively low level, and steel consumers seem very cautious about buying too, as the trend of steel prices remains unclear," the Guangdong trader stated, adding that recently, his firm has had to pay more to mills to get products, and the higher costs are also discouraging him from purchasing too much.

China's national price of HRB400 20mm dia rebar gained Yuan 30/MT ($4.2/t) from April 30 to reach Yuan 3,649/t including the 13% VAT as of May 6, Mysteel's data showed.

Inventories of the five steel products at traders in Mysteel's former smaller sample across just 35 cities declined further too, by 3.5% on week, to 18.1 MnT over May 1-7. However, this was still 49% higher on year.

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