Chinese mills' steel stocks fall to 9-month low

Inventories of the five major carbon steel products comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate held by the 184 Chinese steel mills under Mysteel's survey continued to empty during October 27-November 2, declining for the second straight week by another 3.6% on week to reach 4.61 million tonnes, the lowest since February.

The decrease was mainly reflected in the stocks of long steel, with the volumes of rebar and wire rod falling by 105,200 tonnes and 92,600 tonnes respectively on week, the survey showed.

During this week, many Chinese steelmakers conducted maintenance on their steelmaking facilities or slowed their production pace, a market source in Shanghai explained. "Steel demand in northern China will shrink further with the coming winter season, and their continuing business losses are also putting more pressure on domestic steelmakers," she remarked.

Over October 27-November 2, production of the five major items among the surveyed steel mills came in at a two-month low of 9.59 million tonnes, reversing down by 2.1% on week after the rises recorded over the prior two weeks, the survey showed.

At the same time, some end-users still needed to replenish steel products to fulfil their immediate demand - another factor contributing to the continuous destocking of mills' steel inventories.

However, Chinese steel prices kept declining this week as domestic steel demand was still lackluster overall, impacted by the falls in temperatures in northern China and the COVID-related control measures in some regions, Mysteel Global noted.

As of November 2, the national price of HRB400E 20mm dia rebar, a bellwether of domestic steel-market sentiment, was assessed by Mysteel at Yuan 3,884/tonne ($531/t) including the 13% VAT, lower by another Yuan 112/t on week.

Over October 27-November 2, the daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil among the 237 Chinese trading houses under Mysteel's tracking registered 153,887 tonnes/day, lower by 3,668 t/d or 2.3% from the previous week.

Table 1 Five major steel products stocks at mills (Oct 27-Nov 2)

Inventories of the five steel products at commercial warehouses in the 132 Chinese cities under Mysteel's tracking declined for the fourth consecutive week over October 28-November 3 to 15.8 million tonnes, down another 4.1% on week, according to the survey.

Written by Nancy Zheng, zhengmm@mysteel.com

Edited by Zhenqi Yang, yangzhenqi@mysteel.com

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