Steel Stocks among Chinese Mills Increase Further
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Stocks of the five major finished steel products at the 184 steel mills across China which Mysteel monitors grew steadily over the February 27-March 4 week amid the slow recovery of demand against the rebound in output, with the mills' inventories increasing by 0.6% on week to 13.5 MnT, a new high since Mysteel launched its weekly survey in February 2015.
The latest week-on-week climb in mill stocks was much lower compared with the 4.5% surge recorded over the prior week, as some stocks have been transferred to traders' warehouses, thanks to the resumption of most transportation, Mysteel Global notes.
Among the five major steel products comprising rebar, wire rod, hot rolled coil, cold rolled coil and medium plate, stocks of medium plate and cold-rolled coil posted week-on-week declines of 5.6% and 3.9% respectively, while inventories of the other products were still trending upward.
Domestic steel demand has shown signs of improvement with the gradual resumption of operations at many commercial and industrial sectors, which eased the negative sentiment in the domestic steel market to some extent. "Some steelmakers are not willing to cut their production any lower on expectations of a further recovery in demand," an industry watcher in Shanghai disclosed.
China's steel production reversed up during the same survey period, with total production of the five major steel products rising by 111,200 MT on week to top 8.68 MnT over February 27-March 4, ending the consecutive decline over the prior five weeks, according to Mysteel's database.
However, overall demand from steel users has not fully recovered for the time being and their consumption of steel was still limited, piling considerable pressure on domestic steel traders. "Some warehouses which traders operate are already full," one market source said.
Over the February 28-March 5 period, total inventories of the five steel products held by traders in 35 cities across China climbed to 25.3 MnT as of March 5, up another 6.5% on week and refreshing a new record high since January 2013 when Mysteel commenced the survey, as reported.
The high steel stocks both at steel mills' yards and traders' warehouses indicate that China's steel market is still under severe pressure for the moment, an important factor explaining the persistent fall in domestic steel prices, Mysteel Global notes.
As of March 5, China's average price for HRB400 20mm dia rebar, a bellwether of domestic steel market sentiment, reached Yuan 3,605/MT ($520/MT) including the 13% VAT, down another Yuan 50/MT on week or Yuan 190/MT from one month before, Mysteel's data showed.
Table 1 - Five major steel products inventories at traders Unit: '000 tonnes
| Product | Mar 6 2020 | W-o-W (%) | Feb 7 2020 | M-o-M (%) | Mar 8 2019 | Y-o-Y (%) |
| Rebar | 13,778.1 | 7.9% | 8,513.3 | 61.8% | 10,112.1 | 36.3% |
| Wire rod | 4,510.8 | 3.4% | 2,813.2 | 60.3% | 3,164.8 | 42.5% |
| HR sheet | 3,912.1 | 7.3% | 2,540.3 | 54.0% | 2,714.2 | 44.1% |
| CR sheet | 1,603.9 | 7.2% | 1,196.3 | 34.1% | 1,203.8 | 33.2% |
| Medium plate | 1,490.7 | 0.1% | 1,281.0 | 16.4% | 1,323.3 | 12.7% |
| Total | 25,295.6 | 6.5% | 16,344.1 | 54.8% | 18,518.2 | 36.6% |
Table 2 - Five major steel products inventories at mills Unit: '000 tonnes
| Product | Mar 6 2020 | W-o-W (%) | Feb 7 2020 | M-o-M (%) | Mar 8 2019 | Y-o-Y (%) |
| Rebar | 7,762.4 | 2.1% | 5,127.0 | 51.4% | 3,154.3 | 146.1% |
| Wire rod | 2,113.5 | 1.4% | 1,580.4 | 33.7% | 931.6 | 126.9% |
| HR sheet | 1,849.2 | -3.9% | 1,567.5 | 18.0% | 953.3 | 94.0% |
| CR sheet | 612.5 | 6.9% | 498.4 | 22.9% | 328.5 | 86.5% |
| Medium plate | 1,167.6 | -5.6% | 1,016.0 | 14.9% | 784.2 | 48.9% |
| Total | 13,505.2 | 0.6% | 9,789.3 | 38.0% | 6,151.9 | 119.5% |
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
