Consumption among end-users remained depressed & weakened by the sudden winter freeze while the domestic mills still maintained high output leading to higher steel stocks of the five major finished products.
1. Steel stocks continue to accumulate
As of January 6, total inventories of rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate at the surveyed mills’ yards increased by another 3.2% on week to 5.4 million tonnes.
A market source in Shanghai shared that “Daytime temperatures in northern China have fallen well below zero degrees C and the extremely cold weather has forced many construction firms to end their outdoor work ahead of schedule”. That’s why the demand for steel remained sluggish this week.
Meanwhile, COVID-19 pandemic has resurfaced in Shijiazhuang and Xingtai in North China’s Hebei province, 02 major steel-producing hubs in China. This had disrupted finished-product transportation and local steel demand, while the impact on the mills’ production was not obvious.
2. Total output still grows up despite the down trend in demand
Over December 31-January 6, China’s total output of the five major steel products among the surveyed steel producers continued to grow for the second week. The amount is about 10.52 million tonnes, which is up another 0.6% from the prior week.
At traders’ warehouses in 132 Chinese big cities, finished steel stocks of the five major items also moved up further to top 14 million tonnes as of January 7. The on-week growth also expanded to 6.4% against the prior week’s 2.6%, indicating the lacklustre demand from steel end-users.
Although traders’ steel stocks were not very high, most Chinese traders were reluctant to build up stocks for the time being, as steel prices persisted rather high. As of January 6, China’s national price of HRB 400 20mm dia rebar, a bellwether of domestic steel-market sentiment, was assessed at Yuan 4,422/tonne ($685/t) including the 13% VAT, higher by Yuan 63/t on week and surging by Yuan 584/t from one year ago.
Source: Mysteel
