The stocks of finished steel at trading warehouses across China increased further for the sixth week last week as the Chinese New Year (CNY) holiday is not far off and many traders are in holiday mood, according to Mysteel’s latest survey. The rising pace of stocks accumulation quickened to 18.2% over the January 29-February 4 period, from the 13.8% on-week gain in the prior period, the results showed.
The stocks of rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate among traders in 132 cities nationwide monitored by Mysteel moved up by 3.3 million tonnes on week to top 21.3 million tonnes as of February 4, the survey found.
Responsible for the significant rise in retail stocks was the further softening of trading, with the trading volume of construction steel including rebar and wire rod over January 28 to February 3 plunging by a large 61.4% on week to 30,680 tonnes/day on average, Mysteel’s data showed.
However for this year, most of the rise in stocks has occurred at the mills themselves and among large-sized traders, as steelmakers are resisting lowering prices to make sales despite the softening demand, given their high production costs, Mysteel Global noted.
“For the past three years, many traders opting to build inventories ahead of the CNY break – in anticipation of prices rising after business resumes – have endured losses, and this has taught all traders a painful lesson,” a Shanghai-based trader told Mysteel Global. “In any case, the prices are too high for stocking, and some traders have no cash to accumulate more,” he added.
On the other hand, optimism among mills that demand is improving is encouraging them to build up their own stocks. “Our steel inventories now are higher than at the same period last year, and a quarter of our (recent) production will be placed in our own warehouses,” an official with a steelmaker in Central China said.
The inventories of finished steel products in Mysteel’s former smaller sample in just 35 cities also surged for the sixth week last week, rising by another 2.1 million tonnes or 17.8% on week to 13.6 million tonnes as of February 4.
Written by Anna Wu, wub@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
Photo: World Steel Association
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