China traders’ steel stocks up 3% on low demand

Stocks of major finished steel items held by Chinese traders sampled by Mysteel ended four straight weeks of declines over June 3-9, reversing up 2.6% or by 627,200 tonnes on week, according to Mysteel’s latest stocks survey. Mainly responsible for the uptick were the continued heavy downpours in the southern and central parts of China which thwarted any substantial improvement in actual steel demand from end-users, sources remarked.

Aside from the frequent and intense rainfalls, the ongoing national college entrance exam (Gaokao) period (over June 7-10) also impacted steel purchasing because work on construction sites near examination halls nationwide had to be curtailed, along with traffic on nearby roads, a Shanghai-based analyst said.

The stocks of rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate among steel traders in the 132 Chinese cities under Mysteel’s tracking added up to 24.3 million tonnes as of June 9, the survey data showed.

Among the five major steel products, stocks of rebar increased the most by 365,700 tonnes on week to about 12.2 million tonnes as of June 9. The scale of the rise also dwarfed the 119,100 tonnes on-week rise of wire rod stocks, which settled at 3.7 million tonnes.

The analyst also noted that “in the short term, with the impact of temporary factors such as Gaokao diminishing, buying enthusiasm from end-users may improve marginally. However, it’s a fact that demand is slack as the off-season for steel consumption has arrived,” he noted.

Mysteel’s daily survey on the trading volume of construction steel comprising rebar, wire rod and bar-in-coil among the 237 Chinese steel traders it monitors averaged 166,528 tonnes/day over June 2-8, up by a mere 461 t/d on week, indicating the weakened demand with the arrival of hot and humid summer weather.

Meanwhile, finished steel inventories held by traders in Mysteel’s former smaller sample across just 35 cities reversed up too, rising by 2.9% or 436,800 tonnes on week to 15.5 million tonnes by June 9.

Written by Rong Zhang, zhangronga@mysteel.com

Note: This article has been published in accordance with an article exchange agreement between Mysteel Global and SteelMint.