China Mills’ Stocks Dip Faster on Better Demand

Total stocks of the five major finished steel products held by the 184 steel mills across China which Mysteel monitors emptied at a faster pace over the March 12-18 week, thanks to the further recovery in demand, with the tonnage slipping to 11.67 MnT as of March 18, Mysteel’s latest weekly survey showed. The rate of decline of 9.6% on week was much sharper than the 4.5% dip recorded over the prior week, Mysteel Global notes.

The five major products tracked are rebar, wire rod, hot rolled coil, cold rolled coil and medium plate. Among the total, stocks of wire rod and rebar witnessed the steepest week-on-week drops of 13.5% and 11.6% to 1.77 MnT and 6.63 MnT respectively, as downstream users in the building sector have resumed normal operations and their consumption of steel has increased accordingly.

Mysteel’s daily survey among the 237 sampled trading houses across China showed that spot sales of construction steel comprising rebar, wire rod and bar-in-coil averaged 189,458 MT/day during the March 12-18 period, higher by 42,870 MT/d or 29.3% on week.

With the further improvement in demand, Chinese traders’ stocks also reached a turning point this week. Over March 13-19, total inventories of the five steel products held by traders in 132 cities across China thinned by 2.5% on week to 38.13 MnT, according to Mysteel’s latest weekly survey.

The fall in stocks both at mills’ yards and traders’ warehouses has lent welcome support to the domestic steel market and boosted market sentiment, even though steel demand from downstream users is not very stable for the moment, a market source in Shanghai commented.

Domestic steel prices also saw some recovery over the past week, Mysteel Global notes. As of March 19, the average price for HRB400 20mm dia rebar, a bellwether of the domestic steel market sentiment, reached Yuan 3,664/MT($517/MT) including the 13% VAT, gaining Yuan 62/MT from one week earlier, according to Mysteel’s data.

Thus, some steel mills resumed production after completing maintenance and steel output rebounded again after the slight decrease seen over the prior week. During the March 12-18 period, China’s total production of the five major steel products grew 280,300 MT or 3.2% on week to 8.92 MnT. This was the highest over the past five weeks though was still 9.5% lower from the same period last year, Mysteel Global notes.

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

Table 2 – Five major steel products inventories at traders (March 13-19) (New samples)

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.