Steel stocks at Chinese traders decline further

Chinese traders saw their stocks of the five major steel products continue declining during August 19-25, but the total volume fell at a slower pace of 1.7% on week, as against the 2.8% on-week decline seen in the prior week, Mysteel's latest survey showed. The pressure to destock may gradually increase, with finished steel output rising at a time when demand is yet to show any substantial improvement, market sources warned.

Total output of the five steel items among the 184 Chinese steelmakers Mysteel surveys rose for a fourth week over August 18-24, inching up a tiny 0.3% on week to settle at 9.2 million tonnes.

As of August 25, total inventories of the five steel items among traders sampled by Mysteel in 132 Chinese cities had decreased for the tenth week in row, shrinking by 327,600 tonnes on week to 18.9 million tonnes, according to the survey. The five items comprise rebar, wire rod, hot-rolled coil (HRC), cold-rolled coil and medium plate.

Among the five items, rebar and HRC witnessed the sharpest on-week declines in trader stocks. Rebar inventories dwindled by 202,800 tonnes on week to 7.9 million tonnes by August 25, while those of HRC shed 112,000 tonnes over the same period to some 4 million tonnes, the survey showed.

"Outdoor building activities at construction sites and normal factory operations among manufacturers have been affected by the adverse weather throughout the country - the floods, droughts and tremendous heat that have hit parts of northern and southern China - and steel demand will struggle to pick up," a Shanghai-based analyst said.

Steel inventories held by traders in Mysteel's former smaller sample across just 35 cities lost 330,400 tonnes or 2.8% on week to reach 11.4 million tonnes as of Thursday. This tonnage also registered a ten-week drop.

Written by Rong Zhang, zhangronga@mysteel.com

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