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China steel rebar inventory down 6% on week

 Apr 9  – Inventories of rebar across Chinese steelmakers and social warehouses stood at 14.65 million mt as of April 8, down 6% from a week ago. Stocks are down 15.9% from a year earlier.

Total inventories of long steel continued to post faster decline mainly due to the continuous recovery of demand in the real estate and infrastructure industries in April. The decline speed of social stocks and in-plant stocks diverged, which was mainly reflected in the continuous acceleration of the decrease in in-plant stocks and the slowdown of the decrease in social stocks.

Inventories at Chinese steelmakers fell 469,000 mt on the week and stood at 4.19 million mt. Stocks are down 10.1% from a week ago and down 22.3% from a year earlier.

The decline of in-plant stocks continued to accelerate. The second round of the third batch of central ecological and environmental protection inspections was fully launched, environmental protection production restrictions continued to be tightened, and production continued to be restricted. For example, according to the annual production restriction and emission reduction measures issued by steel enterprises on March 19 and the current rating status, SMM estimates that from April 1 to December 31, environmental protection production restrictions in Tangshan will affect 26.61 million mt of pig iron output. On the demand side, as the temperature in the northern region picks up, transaction volume has gradually increased, and end-user purchases become more active. Steel prices fluctuate rapidly, with relatively strong speculative demand, and the rate of intermediate resource turnover is accelerating.

Inventories at social warehouses fell 466,700 mt on the week and stood at 10.46 million mt, down 4.3% from a week ago and 13% lower from a year ago. The month-on-month increase narrowed 0.2 percentage point from the previous week.

The slight slowdown in the decrease of social stocks was mainly due to the market price correction this week, merchants’ unstable mentality and strong downstream wait-and-see sentiment. The market transaction atmosphere slightly weakened, amid the impact of the Qingming holiday, and the effective shipping day was one day short. According to SMM end-user survey data in March, about 84% of the sample enterprises returned to normal construction status. This was the main reason for the stability of the social stocks. However, according to feedback from downstream customers, most enterprises were still affected by the current high steel prices and maintained the procurement for rigid demand.

Disturbed by the narrow correction of prices this week, the market trading atmosphere was slightly tepid, and the decline in social stocks weakened. As the traditional peak season, end-user demand continues to recover in April. The supply side is affected by the continuous impact of environmental protection and production restrictions, and it is difficult to increase production. It is expected that rebar stocks will continue to post fast decrease. The strong pattern of rebar fundamentals remained unchanged. The Meteorological Observatory reported that some cities in South China and Central South will usher in periods of heavy rainfall, which will have a certain impact on local demand, and price increases may be suppressed to a certain extent in the near term.

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