Stocks of the five major steel items held by traders in 132 major cities across China checked by Mysteel declined for a sixth successive week over April 17-23, shrinking by 5.3% on week, mainly because end-user demand remains stable. However, concerns about oversupply are keeping market watchers cautious about future steel-price trends, survey respondents admitted.
Inventories of rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate being nursed by traders declined to 30.1 million tonnes as of April 23, with the 5.3% on-week decline being relatively stable against the 5.7% drop in the prior period, according to Mysteel’s weekly stocks survey.
Over April 17-23, rebar stocks slipped 5.6% on week to 15.5 million tonnes and wire rod inventories declined by 6.6% on week to 5.9 million tonnes, with the two witnessing the sharpest declines and at a pace faster than the average weekly rate of decline, the survey results showed.
What lay behind the thinning stocks was continuing stable demand, Mysteel Global noted, with transaction volumes of rebar, wire rod and bar-in-coil among 237 major traders over April 20-22 keeping above the 200,000 tonnes/day mark to average 226,747 t/d, Mysteel data shows.
“I’ve seen good sales too this week, but for the interim and longer term period, a cautious attitude on future trends is necessary,” a steel trader in East China’s Zhejiang province told Mysteel Global.
“Now we are enjoying a period of strong demand, but how long will it last? I suspect that demand has already touched a short-term peak, and a retreat in consumption is possible,” he added.
Another Shanghai-based steel trader agreed, but also said that being too pessimistic is unnecessary. “Demand from major infrastructure projects will lend some support, and as for property market, the growth pace of newly-built areas might decline but areas under construction now are still large,” he stated, indicating firm support for long steel demand going forward.
The inventories of five steel products at traders in Mysteel’s former smaller sample across just 35 cities declined further by 5.4% on week to 20.1 million tonnes over April 17-23, as against the 5.1% rise in prior week.
Despite the continuous declines in steel stocks, steel prices still lack momentum to rise as stocks are remain high and production is recovering too. As of April 22, China’s national price of HRB 400 20mm dia rebar declined Yuan 14/tonne ($2/t) on week to Yuan 3,621/t including the 13% VAT, or 15% lower on year.
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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