The inventories of finished steel at trading warehouses across China increased for the third week over January 8-14, as steel demand continued to soften from the sudden freeze in temperatures and the virus resurgence, especially in North China, new Mysteel data shows. However, the space for steel prices to decline remains limited, sources said.
The stocks of five major steel items held by the traders in 132 cities Mysteel monitors moved up further by 745,800 tonnes or 5.3% on week to 14.7 million tonnes as of January 14, according to the latest survey. The five products comprise rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate.
Rebar and wire rod still witnessed the sharpest increases, with stocks of the former up 407,300 tonnes to reach 6.3 million tonnes as of Thursday, and those of wire rod gaining 172,900 tonnes on week to 2.2 million tonnes as of the same day. The rises in the two items’ stocks accounted for 77.8% of the overall increase among the five.
“Besides the sudden drops in winter temperatures lately and the approaching traditional Chinese New Year holiday (over February 11-17), the recurrence of the COVID-19 virus in some regions of China also hurt steel demand to some extent,” a Shanghai-based market insider said. “The virus also brings with it the hidden threat for demand softening once the long holidays are over. If the spread of the virus cannot be contained, work on construction sites would be further affected too if labourers are obliged to stay home,” he added.
The daily trading volume of rebar, wire rod and bar-in-coil among 237 traders Mysteel quizzes weekly plunged by 19.8% on week to 148,139 tonnes/day on average over January 7-13, Mysteel’s data showed.
On January 13, another 124 people tested positive for COVID among China’s 31 provinces, autonomous regions, and municipalities, among which 81 were in North China’s Hebei province, the country’s steel production hub, according to data from China’s National Health Commission.
“Though steel demand has softened, the strength of raw materials prices means the scope for steel prices to fall is still restricted,” a North China-based source said. “For example, the profits that mills are earning from making billet is just a meagre Yuan 100/t ($15.4/t) at the moment, so I don’t think steel prices will soften largely with production costs staying high.”
The inventories of the finished steel products in Mysteel’s former smaller sample in just 35 cities also surged for the third week, rising by another 452,600 tonnes on week to 9.4 million tonnes as of January 14, though the volume was 7.8% lower on year.
Written by Anna Wu, wub@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
Photo: The Wall Street Journal
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