After rising steadily since late August, rebar production among the 137 Chinese steel mills nationwide tracked by Mysteel hit the highest for the year during the week of October 17-23 at 2.51 million tonnes, up another 2.9% or 70,800 tonnes on week, according to the results of the weekly survey.
However, output grew at a slower pace compared with the 3.3% gain in the prior week, as the recent contraction in their margins had caused the mills to slow their production pace, survey respondents said.
During the survey period, the rebar rolling capacity utilization rate among the surveyed producers rose 1.6 percentage points on week to 55.1%, but their operational rate slid 0.7 percentage point on week to 43.3%.
The survey showed significant growth in rebar output during the survey week as steelmakers, especially those located in East, Northeast and Northwest China, increased production to chase profits. Some mills also adjusted their roll plans to make rebars instead of other less-profitable items.
Nonetheless, rebar output last week was still lower by 3.7% from the corresponding week last year when the volume reached 2.61 million tonnes, according to Mysteel's data.
Chinese rebar prices had been trending downwards last week, largely due to cooling market sentiment and dull demand from end-users. On October 24, the country's national HRB400E 20mm dia rebar price, a bellwether of the domestic steel market mood, was assessed by Mysteel at Yuan 3,607/tonne ($506/t) including the 13% VAT, slumping by Yuan 167/t on week.
Meanwhile, steel demand appeared dismal, with spot market trading becoming less active. Mysteel's survey showed that the daily trading volume of long steel items including rebar, wire rod and bar-in-coil among 237 Chinese trading houses it monitors averaged a mere 118,679 tonnes/day over October 18-24 – about half the level during peak demand periods such as in spring.
On the other hand, higher output and tepid spot sales saw rebar stocks at the 137 surveyed mills mount for the fourth week, rising by 8.3% or 119,200 tonnes on week to 1.56 million tonnes as of October 24. Meanwhile, the tonnage at the commercial warehouses in the 35 cities Mysteel follows declined at a slower pace, dipping by 1.5% or 42,700 tonnes on week to 2.79 million tonnes as of the same day.
