Steel stocks at Chinese traders climb quickly on subdued demand

The stocks of finished steel products held at trading houses across China tracked by Mysteel mounted for the third straight week during July 25-31, with the tonnage swelling by 203,100 tonnes on week, a large rise compared with the 58,500 tonnes build-up during the previous week, according to the latest stocks survey.

The sharp rise in retail stocks was mainly attributed to weak end-user demand during the summer lull, when construction activity typically slows amid the hot and rainy weather, a source said.

As of Thursday, total inventories of the five major steel products comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate held by the surveyed traders in the 132 cities Mysteel monitors had increased by 1.4% on week to 15.3 million tonnes, a two-month high.

Inventory growth was reported in all categories except medium plate, with the largest increases in volume being rebar and wire rod, where the former gained by 110,100 tonnes on week to 5.8 million tonnes, and stocks of latter rose by 58,900 tonnes on week to 1.6 million tonnes, the survey data showed.

"Our work on construction sites has been significantly impeded by this week's typhoon as the rains have been especially heavy and the winds very strong," said an official with a building company in East China's Jiangsu province. Typhoon Co-may, the eighth typhoon to hit China this year, made landfall on Wednesday morning, triggering severe weather across eastern China, and causing evacuations and transport disruptions in Shanghai, Zhejiang and Jiangsu, Mysteel Global notes.

The spot trading volume of rebar, wire-rod and bar-in-coil among the 237 trading houses nationwide under Mysteel's coverage sat low at 106,846 tonnes/day on average over July 24-30, staying largely stable on week.

China's domestic steel prices during the sample week found support from firm raw materials costs and expectations of further macroeconomic stimulus. As of July 30, the national price of HRB400E 20mm dia rebar, for example, had moved up by Yuan 22/tonne ($3.1/t) on week to Yuan 3,463/t and including the 13% VAT, according to Mysteel's assessment.

The inventories of finished steel products in Mysteel's smaller sample across 35 cities also accumulated for a third week, rising by 1.6% or 152,900 tonnes on week to reach a two-month high of 9.4 million tonnes by Thursday.

Source:Mysteel Global