The stocks of finished steel products in trading houses across China declined for a fifth straight week over June 4-10, decreasing by another 0.5% on week, as the actual demand for steel continued to subside during the relatively low steel-consumption season currently. Steel production grew further as well.
Total inventories of the five major finished steel products comprising rebar, wire rod, hot-rolled coil (HRC), cold-rolled coil and medium plate held by traders in the 132 Chinese cities Mysteel canvasses lost 107,100 tonnes on week to settle at 21.3 million tonnes as of June 10, Mysteel’s latest stocks survey showed.
Among the five major items, wire rod replaced rebar as the product whose inventories had dropped the most, with rod stocks plunging by 101,900 tonnes on week to 3.1 million tonnes as of June 10. In contrast, stocks of HRC increased the most, rising by 20,200 tonnes on week to reach 3.5 million tonnes, according to the latest survey.
As for steel output, production of the five major items over June 3-9 gained for the second week in a row, increasing by another 45,900 tonnes on week to 11 million tonnes, according to another Mysteel weekly survey.
“East China officially entered the rainy season this week, so demand for construction steel is expected to soften further given that the rains will hamper building work outdoors,” a Shanghai-based futures analyst suggested. “However, those steel end-users that had restrained their buying earlier due to the high prices then may restart procuring as the spot rebar price has returned to late April levels, which should lend demand some support for near term.”
He also noted that the market was facing supply pressure as the capacity utilization rate among steelmakers has kept rising. Blast furnace capacity utilization among the 247 Chinese steel mills under Mysteel’s survey increased for the ninth week over May 28-June 3, edging up by another 0.48 percentage point on week to 91.89%.
The inventories of finished steel products in Mysteel’s former smaller sample across 35 cities totalled 13.8 million tonnes as of June 10, having dipped further by 88,800 tonnes on week.
Written by Rong Zhang, zhangronga@mysteel.com and Anna Wu, wub@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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