Fall in China's rebar output continues

Rebar production among the 137 Chinese steel mills regularly monitored by Mysteel over January 18-24 continued the steady fall that began in late December to reach 2.27 million tonnes, the lowest since Mysteel's launched the survey in February 2015, the latest survey shows.

During the survey week, rebar output slid for the fifth consecutive week by another 3.1% or 72,800 tonnes on week, according to Mysteel's data.

Survey respondents attributed the further decline in rebar output last week to the fact that some steelmakers in East China had suspended operations on their blast furnaces to conduct maintenance, together with their rebar rolling mills. Meanwhile, a few steel producers based in Southwest and East China also reined in long steel output.

During the survey period, both the rebar rolling capacity utilization and the operational rates among these surveyed makers decreased for the fifth week in a row, with the former dipping by 1.6 percentage points on week to 49.7%, and the latter easing by 0.7 percentage point on week to 38.7%.

Domestic spot rebar prices had shown signs of recovery last week as market sentiment improved slightly due to the rebound in raw materials prices and news that the central government is introducing macroeconomic policies that should buoy the steel market, a survey respondent said.

China's national price of HRB400E 20mm dia rebar, for example, was assessed by Mysteel at Yuan 4,046/tonne ($564/t) including the 13% VAT as of January 25, picking up by Yuan 24/t from a week earlier. In parallel, the Mysteel SEADEX 62% Australian Fines index for imported iron ore reversed up by $6.2/dmt during the same period to $136.35/dmt CFR Qingdao.

Meanwhile, rebar inventories at the 137 mills and at commercial warehouses in the 35 Chinese cities Mysteel checks mounted during the period, with the former reversing up by 4.3% or 76,200 tonnes on week to 1.87 million tonnes as of 24 January, and the latter jumping by 7.2% or 339,500 tonnes on week to a four-month high of 5.04 million tonnes as of 25 January.

The seasonal weak demand from end-users accounted for the significant increase in rebar inventories last week, sources said. Over January 19-25, the daily trading volume of rebar, wire rod and bar-in-coil among the 237 Chinese steel traders Mysteel checks shrank further by 18% on week to average 91,686 tonnes/day.

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