Chinese Traders' Steel Stocks Shrink Faster on Firm Demand
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Inventories of the five major steel products held by traders across China slipped further and at a faster pace over April 3-9, mainly thanks to the strong demand appearing during the period. Nevertheless, traders still showed no inkling of wanting to step up prices amid the high stocks and production, Mysteel Global noted.
Stocks of the five steel items comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate held by traders in 132 cities across China decreased for a fourth week to 33.76 MnT as of April 9, according to Mysteel's latest stocks survey. The slide of 4.2% on week was steeper than the 3.5% on-week decline in the prior period.
Among the five items, rebar stocks declined 4.9% on week to 17.5 MnT over April 3-9 while inventories of wire rod saw a decrease of 4.2% on week to 6.8 MnT over the same period. The two products contributed to 72.1% of total inventories, the statistics showed.
"Downstream demand stayed firm this week, and we opted to take more products from mills too. But we cannot boost prices much, as the overall stocks continue to be high," a Shanghai-based steel trader told Mysteel Global.
The trading volume of construction steel comprising rebar, wire rod and bar-in-coil among 237 traders under Mysteel's survey has been hovering above 200,000 MT/day since April 2, with the volume reaching a healthy 260,590 MT/d on April 8, some 49.3% higher on week, Mysteel's data showed.
"Steel prices are expected to keep rangebound for a while as the stable demand currently is lending prices some support. On the other hand, the high stocks and rising production still cast a shadow over the market," the trader said. "I admit I feel a bit worried about steel prices next month, as the demand is likely to retreat by then," he added.
Mysteel's national average benchmark price for HRB400 20mm dia rebar reached Yuan 3,590/MT ($508/MT) including the 13% VAT as of April 8, lower by just Yuan 1/MT on week, according to Mysteel's database.
In Mysteel's former sample among traders in just 35 cities, total inventories in the surveyed traders' warehouses also declined for a fourth consecutive week by 4.5% on week to 22.4 MnT as of April 9, but the stocks were still nearly 60% higher compared with the 14.3 MnT as of April 11, 2019.
