Singapore, 25 May (Argus) — China's steel stocks fell by 15.3pc from a month earlier to 11.38mn t on 22 May, as a pick-up in construction activity helped boost downstream sales. The steepest declines were in inventories of wire rod and rebar, which fell by 22.2pc and 23pc respectively, the China iron and steel association (Cisa) said. Stocks of hot-rolled coil fell by 7.4pc over the period. Rebar stocks declined in 18 of the 19 markets tracked by Cisa, while wire rod stocks fell in 17 markets. Steel stocks rose to the highest level this year in March, reaching around 18mn t on 31 March, after traders bought large quantities of steel in January and February in anticipation of a spike in sales in March as the winter construction lull ended. But construction demand was slow to increase, with steel buying picking up only in late April. Inventory declines may slow next month as rains in several parts of China are likely to curb construction activity. The increase in steel sales and reduction in stocks has boosted profit margins at steelmakers this month. Margins rose above 1,000-1,200 yuan/t ($157-188/t) in early May from around Yn500-800/t last month, but a slowdown in construction steel sales this week has pushed margins lower to around Yn700-1,000/t. Rebar prices in Shanghai, which showed the steepest decline in stocks, increased by around 3pc from 1 April to 25 May to Yn3,830/t, after touching a high for the period of Yn4,120/t on 5 May. Stable seaborne iron ore prices also helped mills control costs and lift profits. Mills are trying to produce as little pig iron as possible to cut costs, instead increasing the scrap charge in the basic oxygen furnace to produce more crude steel from smaller amounts of pig iron. Iron ore and scrap prices and the difference between the two will affect profits of steel companies to a large extent from now on, Cisa said. 5903935
A spike in the end of March's steel demand from the construction industry helped reduce China's steel stocks by 15.3% to 11.38 million tonnes, according to the China Iron and Steel Association (CISA). Wire rod and rebar inventories shrank by 22.2% and 23% respectively, while hot-rolled coil stocks fell by 7.4%. Steel stocks reached 18 million tonnes by April, and inventories are expected to build in June ahead of anticipated rains across China.