China: Mills steel stocks fall to 10-month low

Stocks of the five major finished steel products held by the 184 Chinese steel mills monitored by Mysteel posted a sharper on-week fall over November 5-11 to settle at a 10-month low of 5.2 million tonnes, according to Mysteel’s latest weekly survey. Chiefly responsible for the fall were firm demand from end-users and the lower output of domestic mills, survey respondents said.

Total stocks of the five major items comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate at the surveyed mills were lower by 9% from the prior week, with the on-week drop being 3.2 percentage points higher against the previous week. Within the total, inventories of wire rod and rebar still marked the largest on-week declines of 16.3% and 11.7% respectively during the period, the survey showed.

“Steel consumption from end-users remains at a high level for the time being, thanks to the pleasant weather in most regions of China. This is leading to the fast digestion of stocks both at mills’ yards and traders’ warehouses,” a market watcher in Shanghai said.

Inventories of the five steel products held by traders in the 132 Chinese cities Mysteel samples slipped further for the fifth straight week over November 6-12 to 17 million tonnes, dropping by another 7.1% on week and refreshing the lowest record since Mysteel started the survey in March.

In parallel, steel output among domestic mills also saw some decrease over the past week with more mills halting their steelmaking facilities to conduct routine maintenance. Over November 5-11, total production of the five major steel items reversed down slightly after climbing for the two prior weeks, easing by 0.1% on week to 10.68 million tonnes, the survey showed.

Chinese steel prices have continued the strengthen since late October, with the national price of HRB 400 20mm dia rebar, a bellwether of domestic steel-market sentiment, seeing substantial growth of Yuan 208/tonne ($31.4/t) on week to reach Yuan 4,124/t including the 13% VAT as of November 11, a new high since last December, according to Mysteel’s data.

However, trading activity in the spot market slowed down over the period, as the rapid rise in prices prompted many buyers to adopt a wait-and-see stance. Over November 5-11, the daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil among the 237 trading houses across China averaged 237,647 tonnes/day, down 14,734 t/d or 5.8% on week, Mysteel’s data showed.

Table 1 Five major steel products inventories at mills (Nov 5-11)

Table 2 Five major steel products inventories at traders (Nov 6-12)

Note: Mysteel has started publishing the new set of data regarding traders’ steel inventories since March 19 to better represent the market with bigger sample sizes, and the on-year comparisons will be filled up when feasible.

Rebar and wire rod: Sample size is 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.

Written by Nancy Zheng, zhengmm@mysteel.com

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