Steel stocks held by Chinese traders declined further by nearly 1 MnT on week over May 22-28, though the fall was slower than the previous period’s 1.5 MnT decline, as rising prices and rising temperatures have moderately dampened demand, market sources said.
The inventories of rebar, wire rod, hot-rolled coil (HRC), cold-rolled coil (CRC) and medium plate among traders in 132 cities across China thinned by another 4.1% on week to reach 23.4 MnT as of May 28, Mysteel’s latest stocks survey showed.
“Last week, steel prices had improved markedly as market sentiment had been shored up by the ‘Two Sessions’ meetings in Beijing. However, the rising prices interrupted the sales of steel,” a Central China-based steel trader told Mysteel Global.
As of May 20, China’s national average price of HRB 400 20mm dia rebar assessed by Mysteel had touched a new high since February 3 of Yuan 3,805/MT (USD 532/MT) including the 13% VAT. However, by May 27 the price had retreated to Yuan 3,766/MT, some Yuan 39/MT lower on week.
Medium plate was the only item among the five major steel products that witnessed an on-week rise in its stocks, with inventories reversing up by 24,100 MT on week to 1.7 MnT as of May 28, according to Mysteel’s data.
“In the early weeks of May, our usual daily sales of rebar, HRC and medium plate were 10,000 MT on average, but after the price surge, we could only achieve half that level,” the trader added.
The trader also remarked that the frequent rains in South China had moderately hurt demand. “And in some regions of Central China, daytime temperatures have already climbed beyond 35 Celsius degrees – a bit hot for outdoors construction work,” he stated.
Steel prices are expected to trend downward in the near-term future. “Prices have already shown signs of weakness. The economic stimulus measures outlined at the Two Sessions meetings were all within market expectations and so news of them was unable to shore up the market significantly. Besides, the continuing rise in production is weighing on prices a lot,” he analysed.
Steel inventories at traders in Mysteel’s former smaller sample across just 35 cities declined further by 596,100 MT or 3.7% on week to 15.5 MnT over May 22-28, though still some 40.2% higher on year.
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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