China iron and steel association Cisa member mills increased steel output in mid-May to the second-highest level for data going back five years.
Cisa mills produced an average 2.08mn t/d crude steel over 11-20 May, up by 1.4pc from 1-10 May and by 1.88pc from a year earlier. Cisa data include more than 100 of the country’s largest steel mills.
Cisa mill inventories increased by 1.51pc to 14.8833mn t over 11-20 May from 1-10 May and are up by 56.13pc from the start of the year, Cisa data shows.
Active trade and rising prices in the domestic market this month motivated mills to increase output further, which led to the short-term increase in inventories, a Shanghai-based trader said. “But since traders accelerated bookings from mills in response to traders’ fast inventory declines, the inventory rise at key mills will not heavily weigh on market sentiment.”
China’s steel inventories typically peak in late winter ahead of spring construction demand, but this year’s Covid-19 lockdowns swelled inventories to record levels.
Inventories of five main steel products in trading firms’ warehouses in 20 major cities fell by 950,000t, or 6.3pc, to 14.03mn t in mid-May from the previous 10-day period, Cisa’s calculations show. Warehouse inventories have fallen for seven weeks in a row and are down by 30.6pc from a peak in early March.
The five main steel products include hot-rolled coil (HRC) and sheet, cold-rolled coil and sheet, plate, wire rod and rebar. HRC showed the fastest fall in inventories, down by 10pc in mid-May from early May. Rebar saw the second-fastest drop, down by 8.2pc from early May.