Decline in Chinese Mills’ Steel Stocks Narrows

Stocks of the five major finished steel products held by the 184 steelmakers across China which Mysteel monitors continued to decline but at a slower pace over the April 16-22 week to reach 8.2 MnT, Mysteel’s latest weekly survey showed.

Stock levels received a lift from the ongoing rally in steel production while consumption underwent a slight retreat, resulting in an on-week decline of 4.8% against the drop of 9.3% in the prior period, the survey results show.

Among the five major products tracked – rebar, wire rod, hot rolled coil, cold rolled coil and medium plate – stocks of wire rod and rebar recorded the largest week-on-week declines of 8% and 5.7% to 1.13 MnT and 4.33 MnT respectively.

Stocks at traders’ warehouses also emptied more slowly over April 17-23, with the tonnage of the five items held by traders in the 132 cities cross China totalling 30.14 MnT as of April 23, down 5.3% on week, according to the survey. The decline was 0.4 percentage point lower from one week earlier.

“April is the peak season for steel consumption and demand from users remains almost stable for the moment,” a market source in Shanghai commented. “But the sustained rise in production is aggravating attempts by mills and traders to destock.”

Mysteel’s daily survey among the 237 sampled trading houses nationwide showed that spot sales of construction steel comprising rebar, wire rod and bar-in-coil averaged 221,542 MT/day over the April 17-23 period, down 5.6% on week. Nevertheless, sales stayed at a healthy level and posted a year-on-year rise of 13%, Mysteel’s data showed.

Domestic steel production grew further over the past week, with total output of the five major steel items reaching 10.3 MnT over the April 16-22 week, up another 1.7% on week and hitting the year’s high, the survey results indicated.

The weekly production was only 2.1% lower than one year ago, indicating that steel output is almost back to normal while stocks at mills’ and traders’ yards were higher by a worrying 82.6% on year, exerting more pressure on the domestic steel market and restraining the growth in prices, Mysteel Global notes.

“Demand from end users has reached a relatively high level and it is hard to see a substantial breakthrough in the coming term,” the Shanghai-based market source said, adding that domestic steel prices are likely to hover low in the coming term under the severe pressure of destocking.

As of April 23, the national price of HRB 400 20mm dia rebar, a bellwether of the domestic steel market’s sentiment, reached Yuan 3,623/MT ($513/MT) including the 13% VAT, down Yuan 9/MT on week or slumping by Yuan 628/MT on year, according to Mysteel’s database.

Table 1 Five major steel products inventories at mills Unit: ‘000 tonnes

Table 2 Five major steel products inventories at traders (April 17-23)

Note: Mysteel has started publishing the new set of data regarding traders’ steel inventories starting March 19 to better reflect the market situation with bigger sample sizes, as explained in the previous data update. Month-on-month and year-on-year comparisons will be filled up on later dates when they are available.

Rebar and wire rod: Sample size is now increased to 429 warehouses in 132 Chinese cities from the previous 215 warehouses in 35 cities.

Hot-rolled coil (HRC): Sample size is increased to 194 warehouses in 55 cities from the previous 138 warehouses in 33 cities.

Cold-rolled coil (CRC): Sample size is increased to 182 warehouses in 29 cities from the previous 134 warehouses in 26 cities.

Medium plate: Sample size is increased to 217 warehouses in 65 cities from the previous 132 warehouses in 31 cities.

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