The world’s largest steel industry just sent out another warning flare as producers grapple with the coronavirus outbreak: nationwide stockpiles of reinforcement bar have swelled to the most on record, reported Caixin.
China’s mammoth steel sector — which accounts for more than half of global production — is in turmoil because of the outbreak, hit by transport curbs, worker shortages and a slide in demand. Given the challenges, mills have been reining in output, although there are limits to how much they can cut without shutting down furnaces, a complicated and costly move. Signs of surging steel inventories may add to downward pressure on iron ore prices.
The holdings — which show big seasonal swings and normally peak in March — jumped 14% to 10.8 million tons last week, the highest ever, according to Beijing Custeel E-Commerce Co. Inventories more than doubled since mid-January. Last year, China’s mills made almost 1 billion tons of steel in total.
The China Iron and Steel Association recently flagged the “high level” of inventories and urged members to “do a good job of limiting output.” Separately, RBC Capital Markets said construction in China is “still at an effective halt,” and forecast a rise in both steel and iron ore holdings.