China Mills’ Stocks Decline at a Slower Pace

Total stocks of the five major finished steel products held by the 184 steelmakers across China which Mysteel monitors continued to trend downward for a fourth straight week over March 26-April 1 to reach 10.2 MnT, representing a week-on-week slide of 6.1%, according to Mysteel’s latest weekly survey. However, the decline narrowed compared with the 6.8% drop recorded over the prior period, given the steadily recovering production, survey respondents noted.

Over the March 26-April 1 week, China’s production of the five products comprising rebar, wire rod, hot rolled coil, cold rolled coil and medium plate, witnessed another rise of 2.4% on week to 9.36 MnT, the highest level since mid-February, Mysteel’s survey showed.

The domestic mills have been ramping up production recently on expectations of better demand in the traditional peak season for steel consumption in spring.

Long steel output increased significantly over the March 26-April 1 week, thanks to stable demand from construction contractors. Mysteel’s daily survey among 237 sampled trading houses across China showed that the average trading volume of construction steel comprising rebar, wire rod and bar-in-coil reached 202,052 MT/day over March 27-April 2, higher by 2.9% on week, according to Mysteel’s data.

However, production of flat steel was still constrained, given the slow digestion of stocks amid the weak demand, Mysteel Global notes. “Demand for flats from downstream users is not as strong as that for long steel, and it is hard to see a substantial improvement in the near term given that consuming industries including automobile and home appliance makers are similarly depressed,” a market source in Shanghai explained.

China’s HRC price has weakened continuously over the past week, with Mysteel’s national average benchmark price for Q235 4.75mm HRC slipping to a 33-month low of Yuan 3,370/MT ($475/MT) including the 13% VAT as of April 2, losing another Yuan 111/MT from one week earlier, Mysteel’s data showed.

Over March 27-April 2, Chinese steel traders’ inventories emptied at a slower pace, with the tonnage of the five steel products held by traders in 132 cities country-wide down 3.5% on week to 35.2 MnT as of April 2, Mysteel’s survey showed.

Among the total, stocks of hot-rolled coil only decreased by 1.4% on week to 5.3 MnT as of April 2, and that for cold-rolled coil even reversed up 0.2% on week to 2.2 MnT during the period after declining by 2.4% over the previous week, according to the data.

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

Table 2 – Five major steel products inventories at traders (March 27-April 2)

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.

The old set of data is still available in the separate data bank service until March 11, 2021.

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