Chinese mills' steel stocks down after the holiday

Stocks of the five major finished steel products at the 184 Chinese steel mills monitored by Mysteel fell by 7.4% in the first week after the National Day holiday, mainly thanks to the replenishment of end-users and the continuous decline in mills' output, Mysteel Global learned.

Over October 9-14, total stocks of the five major items comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate at the surveyed mills retreated from the prior week's five-month high to register 6.6 million tonnes, Mysteel's latest weekly survey showed.

Many end-users returned to the market to replenish their inventories, according to a market source in Shanghai. Logistics were also back to normal after the long break, boosting the level of steel consumption during the latest survey period.

Mysteel's daily survey among 237 trading houses across China showed that the daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil averaged 253,818 tonnes/day over October 9-14, higher by 5.2% from the last week before the break and reaching an all-time high since Mysteel launched the survey in March 2015.

Total production of the five major steel products continued to decrease over October 8-14, dipping by another 0.9% from that over October 1-7 to 10.6 million tonnes, as domestic steel mills were not active in ramping up production given the still high stocks at their yards, according to Mysteel's other survey.

Inventories of these five steel products held by traders in the 132 Chinese cities Mysteel samples also reversed down over October 9-15 with the recovery in demand from downstream users. The tonnage came in at 21.8 million tonnes as of October 15, down 4.9% from the prior survey period, the survey showed.

However, Chinese steel prices started to soften since October 13 as steel market sentiment turned negative, and high-priced steel products were not popular in the physical market. "Many end-users only prefer to purchase some products for their immediate needs, and for the time being, traders are not active in building up stocks," the Shanghai-based market source said.

For example, as of October 15 the national price of HRB 400 20mm dia rebar, a bellwether of the domestic steel-market sentiment, moved down for the third consecutive day to Yuan 3,810/tonne ($567/t) including the 13% VAT, according to Mysteel's data. This was lower by Yuan 19/t from the price on October 12 while it was still Yuan 54/t higher from that before the holiday.

Table 1 Five major steel products inventories at mills (Oct 9-14)

Table 2 Five major steel products inventories at traders (Oct 9-15)

Note: Mysteel has started publishing the new set of data regarding traders' steel inventories since March 19 to better represent the market with bigger sample sizes, and the on-year comparisons will be filled up when feasible.

Rebar and wire rod: Sample size is increased to 429 warehouses in 132 Chinese cities from the previous 215 warehouses in 35 cities.

Hot-rolled coil (HRC): Sample size is increased to 194 warehouses in 55 cities from the previous 138 warehouses in 33 cities.

Cold-rolled coil (CRC): Sample size is increased to 182 warehouses in 29 cities from the previous 134 warehouses in 26 cities.

Medium plate: Sample size is increased to 217 warehouses in 65 cities from the previous 132 warehouses in 31 cities.

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

Photo: World Steel