The stocks of finished steel held by Chinese traders surveyed by Mysteel increased again over January 15-21, gaining by another 7.7% on week and making for the fourth straight weekly rise, Mysteel Global noted. Last week’s pickup was faster than the 5.2% on-week rise in the prior period, but traders’ enthusiasm for stocking up has clearly cooled down amid high prices and uncertainties regarding price trends after the Chinese New Year holiday.
The inventories of the five major steel items held by the traders in China’s 132 cities moved up by 1.1 million tonnes on week to 15.9 million tonnes as of January 21, Mysteel’s latest stocks survey showed. The five products comprise rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate.
“This year, traders are very cautious about accumulating inventory, given that they’ll be paying an average of Yuan 300-400/tonne more for their steel than this time last year. Some mills are opting to lock-in prices, and the sales agents have to build stocks passively, but the volume will not be large,” a Shanghai-based steel trader said.
A Shanghai-based analyst pointed out that unlike large traders with generally deep pockets, small traders are under greater financial pressure so their willingness for building up stocks is weaker now. “Though the common expectation for steel prices after Chinese New Year holiday (over February 11-18) is positive, no one knows for sure when or even if prices will urge, and small traders can’t afford to hold onto their stocks for too long,” she added.
In some regions, the stock levels of mills are rising (more than usual at this time of year), reflecting the makers’ great confidence in prices and demand being strong this half, one seasoned industry watcher noted. On the other hand, traders are showing weaker enthusiasm for building up stocks, especially small traders, while at the same time, end-users also have no intention of ramping up stocks while prices remain so high, according to Wang Jianhua, Mysteel’s chief analyst.
As of January 20, the trading volume of construction steel including rebar among the 237 traders Mysteel samples across the country softened to only 104,476 tonnes/day, down 18.3% on week, Mysteel’s data showed, which reflected the further weakness in steel demand.
The inventories of finished steel products in Mysteel’s former smaller sample in just 35 cities also surged for the fourth week last week, rising by another 718,200 tonnes on week to 10.2 million tonnes as of January 21.
Written by Anna Wu, wub@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
Photo: World Steel Association
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