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Chinese traders’ steel stocks further dip on firm sales

Steel stocks at Chinese traders’ warehouses declined further and faster over September 11-17, thanks to the firm end-user demand over the period, even though market sentiment stayed gloomy, Mysteel Global noted.
The inventories of rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate among traders in 132 cities nationwide checked by Mysteel decreased for the second week, declining by 168,500 tonnes or 0.7% on week to 22.85 million tonnes as of September 17, as against the 3,400 tonnes on-week decline in the prior period, Mysteel’s latest stocks survey showed.

Among the five items, rebar and wire rod saw the sharpest on-week falls, losing 194,600 tonnes and 98,800 tonnes on week to 12.3 million tonnes and 3.2 million tonnes respectively, according to the survey.

“Actual demand still exists. I can see that from the considerable number of transactions we made over the past week, especially last Friday and this Monday,” a Shanghai-based steel trader said, “and my friends in Guangdong (South China) also said that demand there was stable,” he added.

The trading volume of rebar and wire rod among the 237 traders Mysteel checks across China averaged 218,255 tonnes/day over September 10-16, down 1.3% on week, Mysteel’s data showed.

“Real demand has stayed strong this year after the virus outbreak, but the market’s expectations for demand in September and October are too ambitious, so once the hopes are not satisfied, prices will likely lose ground,” the trader said.

The most-traded rebar contract on the Shanghai Futures Exchange for delivery next January declined by Yuan 197/tonne ($29.1/t) from the settlement price on September 1 to close the daytime session on September 17 at Yuan 3,577/t.

Steel inventories held by traders in Mysteel’s former smaller sample across just 35 cities, declined 55,100 tonnes or 0.4% on week to 15.7 million tonnes as of September 17.

Written by Anna Wu, wub@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com