Chinese traders stock up more steel in January

Stocks of steel inventories in 20 major cities in China rose by 3.6pc from a month earlier to 8.54mn t as of 22 January, indicating a modest uptick in trader restocking.

Rebar stocks increased by 5.6pc to 2.74mn t and wire rod stocks climbed by 14.8pc, according to the China iron and steel association Cisa. Hot-rolled coil and cold-rolled coil stocks rose by 4.4pc to 1.72mn t and by 0.1pc to 1.79mn t, respectively. Stocks of steel plate fell by 6.1pc to 1.1mn t.

Third-party data, unrelated to the official Cisa data, showed a sharp increase in trader restocking of steel products this week compared with the previous three weeks.

But traders held fewer stocks this winter compared with last winter largely because of pessimistic expectations of the future market.

Thawing US-China trade relations and a warmer winter has resulted in fewer disruptions to construction activity and turned the steel market outlook from pessimistic to optimistic, said the China Steel Logistics Professionals Committee (CSLPC).

Restocking of long products is expected to accelerate after the lunar new year holiday next week as traders prepare for an uptick in post-winter demand from construction projects. Stocking up of flat products is expected to happen at a slower pace. Traders' steel stocks may reach a short-term peak by the end of February.

The combined effects of favourable policies to spur economic growth, easy availability of funding and higher demand for steel products will encourage mills to produce at a faster pace after the lunar new year holiday, said CSLPC.