Posted on 21 Feb 2022
Steel stocks at the 184 Chinese steel mills surveyed by Mysteel reversed down this week after piling up for four consecutive weeks including during the week-long Chinese New Year (CNY) holiday over January 31-February 6. The dip occurred mainly because mills started to deliver steel products to traders after the holiday, fulfilling on orders signed earlier, market sources indicated.
As of February 16, the stocks of five major steel products - namely rebar, wire rod, hot-rolled coil (HRC), cold-rolled coil and medium plates - at mills fell 3.5% on week to 6.3 million tonnes.
The stocks at mills thinned even though their output reversed up, Mysteel Global noted. Over February 10-16, weekly output of these five major products increased 1.8% on week to 8.9 million tonnes, according to Mysteel's survey.
The fall in mill inventories only means that "the stocks are transferred to the traders" while steel consumption has not yet fully recovered, an official from a steel mill based in East China's Shandong stated.
"We are just delivering the products to our agents in the market for the orders they placed in January," an official from another steel company based in North China's Hebei province echoed.
He added that recently, however, traders have not been very active in placing new orders, partly because of the delayed resumption of work on construction projects in North China due to restrictions imposed during the Winter Olympic Games, being held in North China's Beijing, Yanqing and Zhangjiakou of Hebei province. The Games will last until February 20.
In the meantime, restrictions on steelmakers in those parts of North China near Winter Olympics venues also remain in place, reducing steel output there. "This also contributed to the mild increase in the national steel output and the fall in mills' stocks," another Hebei mill official said.
"We are a 'A' category steel producer, so in principle, we are free from any restrictions, but because of the Winter Olympics, we are still operating only at around one third of our capacity," he told Mysteel Global.
Chinese steel producers, especially those in environmentally sensitive areas in the North China region, are categorized "A" to "D" by the local governments to reflect their environmental protection performance. Apart from "A" category mills, steelmakers ranked "B" to "D" are subject to production curbs of varying intensity wherever restrictions for air quality improvement are announced. Government authorities consider this a more effective way to reduce air pollution and to encourage mills to improve their environmental protection capabilities.
Even though Mysteel's survey found that mills' stocks during the period were 36.1% lower on year, Chinese steel mills remain concerned about actual steel demand, and some have started to reduce steel prices to boost sales.
"We have started to cut our prices since Saturday because sales this week have been poor," an official from a third steel mill in Hebei said, adding that by Wednesday, the company had already cut HRC prices by Yuan 800/t ($126.4/t).
Table 1 Five major steel products stocks at mills (Feb 10-16)
|
Product |
Volume ('000 t) |
WoW (%) |
MoM (%) |
YoY (%) |
|
Rebar |
3,159.3 |
-2.9% |
77.0% |
-38.3% |
|
Wire rod |
1,033.0 |
-7.2% |
76.6% |
-42.7% |
|
HR sheet |
963.3 |
0.4% |
14.3% |
-32.8% |
|
CR sheet |
409.4 |
-6.3% |
19.0% |
-3.3% |
|
Medium plate |
729.7 |
-4.3% |
6.3% |
-32.3% |
|
Total |
6,294.7 |
-3.5% |
48.4% |
-36.1% |
Table 2 Five major steel products stocks at traders (Feb 11-17)
|
Product |
Volume (million t) |
WoW (%) |
MoM (%) |
YoY (%) |
|
Rebar |
12.69 |
12.1% |
107.0% |
-13.0% |
|
Wire rod |
4.82 |
10.5% |
114.4% |
-12.1% |
|
HR sheet |
4.04 |
3.4% |
36.8% |
4.7% |
|
CR sheet |
2.17 |
2.5% |
18.1% |
22.5% |
|
Medium plate |
2.51 |
3.4% |
34.2% |
1.1% |
|
Total |
26.22 |
8.7% |
74.4% |
-6.9% |
Note: Mysteel has started publishing the new set of data regarding traders' steel inventories since March 19 2020 to better represent the market with bigger sample sizes.
Rebar and wire rod: Sample size is increased to 429 warehouses in 132 Chinese cities from the previous 215 warehouses in 35 cities.
Hot-rolled coil (HRC): Sample size is increased to 194 warehouses in 55 cities from the previous 138 warehouses in 33 cities.
Cold-rolled coil (CRC): Sample size is increased to 182 warehouses in 29 cities from the previous 134 warehouses in 26 cities.
Medium plate: Sample size is increased to 217 warehouses in 65 cities from the previous 132 warehouses in 31 cities.
Source:Mysteel Global
