Steel product inventories with trading firms in 20 main Chinese cities as of 18 December fell by 4.1pc from a month earlier, which has supported prices this month.
Hot-rolled coil (HRC) stocks fell by 16.9pc against the previous month at 1.65mn t, while cold-rolled coil stocks fell by 1.47pc at 1.79mn t, according to the China iron and steel association Cisa. Stocks of steel plates fell by 2.1pc to 1.17mn t. Among construction steel products, rebar stocks fell by 3.4pc to 2.59mn t but wire rod stocks increased by 13.3pc at 1.02mn t.
Third-party data, unrelated to the official Cisa data, released today shows an increase in rebar and wire rod stocks this week from the previous week, although stocks of hot and cold-rolled coil were lower against a week earlier.
Argus-assessed domestic rebar prices ex-warehouse Shanghai have fallen by 5pc so far this month compared with an 18pc drop in November. Domestic HRC prices in Shanghai have increased by 1pc this month compared with an 11pc drop last month. Expectations of a stable short-term domestic market has also made steel exporters keep their offer prices stable.
The construction steel market is still weakened by the absence of any significant winter restocking that typically kicks off in December, as trading firms and downstream industries are not optimistic about the market outlook in next year's first quarter.
But any worsening of pollution in the remaining winter months could force north China cities to get even stricter in their steel output cuts. This could coincide with a late restocking surge from trading firms as they build stocks for the lunar new year holidays in February and construction sites reopening in March.
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