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China steel market active in preholiday restocking

Chinese steel mills, traders and end-users have been active in replenishment ahead of China’s upcoming National Day holiday, fearing that trading or transportation might slow down or be halted completely during the long holiday over October 1-8, Mysteel Global has learned from domestic industry sources.

By September 23, some 90% of steel producers in Tangshan and Wu’an cities, two major steel producing hubs in North China’s Hebei province, had already completed restocking, estimated a local industry source with close connections to these mills.

“They are worrying about transportation delays because of possible environmental restrictions during the holiday,” she said, pointing out that Tangshan’s Jingtang port will possibly be closed during the holiday as a pollution abatement measure, as the use of diesel trucks and loading and unloading of goods at the port would cause air pollution.

Last year Tangshan’s Jingtang and Caofeidain ports – two of the busiest iron ore trading ports in China – were ordered to cease operations before the National Day holiday, and this year over September 19-22, transportation to and from the ports were already closed temporarily as the city intensified restrictions for air pollution control, Mysteel Global understands.

As of September 23, stocks of imported iron ore sintering fines at 64 Chinese steel mills under Mysteel’s bi-weekly survey reversed up by 1.94 million tonnes over September 10-23 to an eight-month high of 18.5 million tonnes, reflecting the mills’ eagerness to replenish inventory.

Steel traders and end-users are also worried about disruptions to transportation over the holiday period, so they too stocked some products beforehand. “During the holiday, steel deliveries to customers will be very few,” according to a logistics official of a steel mill based in East China’s Jiangsu province. “Steelmakers like us will just leave one or two trucks on duty, only to fulfill any immediate buying need of clients.”

But some may hold off buying until next week, the last week before the holiday celebration, “as they (the buyers) are unsure whether prices will move down further,” he said.

Written by Olivia Zhang, zhangwd@mysteel.com

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