A further recovery in demand saw inventories of five major carbon steel products at 184 Chinese steel mills regularly monitored by Mysteel drop 4.1% in the week of Feb. 16-22 to 6.86 million tonnes, putting the end of the continuous growth observed over the previous six weeks.
During the study period, stocks of five major steel products, including rebar, wire rod, hot-rolled coil, cold-rolled coil and middle plate, at the steel mills included in the sample , declined to varying degrees, while the tonnage of rebar increased significantly.
Chinese steel prices in both physical and futures markets rose this week due to positive sentiment in the domestic market. As of February 22, the national price of HRB400E 20mm rebar in China has been rising for six business days to 4,341 yuan per tonne (US$630 per tonne), including 13% VAT, up 90 yuan per tonne from per week, and is the highest since July 4. 2022.
Inventory drawdown of rolling mills was due in part to a steady improvement in domestic demand for steel as more end-users reopened operations after the Chinese New Year break and returned to the market for purchasing to meet its demand.
Meanwhile, speculative demand also improved this week thanks to higher steel consumption expectations in the near term.
Domestic steel production continued to rise from Feb. 16 to Feb. 22, with total production of the five main types of steel among surveyed steel mills for the fifth week in a row increased by another 1.7% on the week to 9.32 million tons, the highest level since the end of December 2022, according to the survey.