China's retail steel stocks drop further on week

Retail stocks of the five major carbon steel items held by the Chinese traders that Mysteel regularly checks fell for the second consecutive week during August 14-20, according to the results of Mysteel's latest weekly survey.

As of August 20, the combined inventories of rebar, wire rod, hot-rolled coil (HRC), cold-rolled coil (CRC) and medium plate held by traders in the 132 cities Mysteel monitors had dipped further by 0.6% or by 121,800 tonnes on week to 19.29 million tonnes, the survey results revealed.

By product, stocks of rebar, wire rod and CRC posted on-week declines, while those of rebar and wire rod contributed the most to the overall inventory drop, the same survey findings showed.

Specifically, rebar stocks thinned by 1.4% or 114,000 tonnes on week to 7.9 million tonnes as of August 20, while inventories of wire rod slipped by 3% or 51,400 tonnes on week to 1.69 million tonnes as of the same day.

One explanation for the inventory decline could relate to lower steel production during the sample week.

The combined output of the five carbon steel products among the 137 steel mills under Mysteel's tracking totaled 8.02 million tonnes over August 13-19, contracting by 1.1% or 91,800 tonnes on week, marking the lowest level since early March this year.

Yet an uptick in market sentiment stimulated some speculative buying in the physical market, a Shanghai-based analyst pointed out.

For instance, the combined tonnage of rebar, wire rod and bar-in-coil traded among the 237 trading houses nationwide under Mysteel's tracking averaged 90,976 tonnes/day over August 13-19, recovering by 10.7% or 8,804 t/d on week.

The significant rise can also be attributed to the relatively low basis for comparison the previous week when Typhoon Dolphin impacted demand for steel longs, as Mysteel Global has reported.

The upbeat market mood has raised Chinese finished steel prices, with Mysteel assessing the national price of HRB400E 20mm dia rebar at Yuan 3,228/tonne ($480/t) on August 19, up by Yuan 6/t on week, while the average price of Q235 4.75mm HRC rose by a larger Yuan 33/t on week to Yuan 3,300/t on the same day.

Meanwhile, finished steel inventories held by traders in Mysteel's smaller sample of 35 cities also slipped further this week, with the tonnage coming in at 11.82 million tonnes as of August 20, down by 0.9% or by 105,500 tonnes from August 13.

Source:Mysteel Global