Steel inventories of Chinese mills rose 5.7% over the week

Inventories of five major finished steel products at 184 Chinese steel mills began to grow rapidly as demand from end-users declined further with the upcoming Chinese New Year holiday on February 11-17.

The total inventories of the five main finished steel products, including rebar, wire rod, hot rolled coil, cold rolled coil and flat products, at the shipyards of the surveyed plants increased in the fifth week to 6.3 million tonnes as of January 27, representing According to the study, the weekly growth of 5.7% up from 3.3% growth in the previous week.

“It is normal to see a continuous rise in steel inventories at factories and traders ahead of the New Year holidays, as many builders are already returning home,” a source in Shanghai said, adding that the domestic steel market is expected to expand in the next two to three weeks. more calm.

This was in line with a daily survey of 237 trading houses across China, which showed that their daily trade in construction steel, including rebar, wire rod and sheet steel, fell below 100,000 tonnes per day, nearly 40% below the previous week's average.

Falling demand and the high production costs they are struggling with have convinced many Chinese businesses to maintain their steel mills, leading to further declines in steel production. Between January 21 and 27, total production of the five major steel mills surveyed declined for the third straight week, down another 1.3% weekly to 10.3 million tonnes.

Stocks of finished steel for five steel products in traders' warehouses in 132 cities increased to 18 million tonnes as of Jan 28, up 13.8% over the week and 5.9 percentage points over the previous week, the survey showed.

Steel prices in the Chinese domestic market have recently fluctuated within a narrow range in a calm market. For example, the national price for HRB 400 rebar with a diameter of 20 mm, which is an indicator of steel market sentiment, hovered around 4,350 yuan per tonne ($ 671 per tonne) last week. According to Mysteel, the price was 4354 yuan per tonne, including 13% VAT as of January 27, up 14 yuan per tonne from a week ago.