Decline in China's retail steel stocks slows

Steel inventories held by Chinese traders surveyed by Mysteel decreased further by 278,300 tonnes on week during May 20-26, though the rate of fall was slower compared with the 422,300 tonnes decline in the previous week, new survey data show. Buying enthusiasm among end-users had been dampened by the weakening steel prices in the domestic market, respondents said.

Total stocks of rebar, wire rod, hot-rolled coil (HRC), cold-rolled coil (CRC) and medium plate among traders in 132 cities nationwide under Mysteel's tracking declined for the third straight week, dipping by another 1.2% on week to reach 23.8 million tonnes as of May 26, according to the latest stocks survey.

Chinese steel prices have been softening since early May, and as of May 25, the country's national price of HRB400E 20mm dia rebar assessed by Mysteel had hit a 4.5-month low of Yuan 4,766/tonne ($708/t) including the 13% VAT, or down Yuan 108/t on week.

Among the five items, stocks of CRC and medium plate witnessed on-week rises, mounting by 11,400 tonnes and 51,000 tonnes during the survey week to reach 2.2 million tonnes and 2.3 million tonnes respectively, the survey data found. Meanwhile, rebar stocks dropped significantly, falling by 203,200 tonnes to 11.8 million tonnes over the same period.

The daily trading volume of rebar, wire rod and bar-in-coil among 237 traders across China whom Mysteel follows averaged 155,130 tonnes/day over May 19-25, up 7.5% on week though still 14.4% lower on year, according to Mysteel's data.

"Currently, it may still take some time for market sentiment to improve, and destocking of steel inventories is mainly being underpinned by building contractors purchasing steel products only to fulfill their immediate needs," according to an industry watcher in East China.

Meanwhile, steel stocks at traders in Mysteel's former smaller sample across just 35 cities slipped for the third week too, declining by 1.2% or 178,000 tonnes on week to 15.1 million tonnes by May 26.

Written by Rong Zhang, zhangronga@mysteel.com

Note: This article has been published in accordance with an article exchange agreement between Mysteel Global and SteelMint.