Market participants in China believe elevated steel inventories with mills is likely to be a norm in 2020, according to China Metallurgical News.
In mid-May, inventories stood at144.88mn mt, up by 56.13pc from the beginning of the year. In early 2020, cities in China were under lockdown with markets shut amid COVID-19 outbreak. But steel plants continued production albeit, at a lower level.
Though domestic steel consumption has gradually increased, mills have also ramped up production resulting in piled up inventories. In April, crude steel production returned to the pre-COVID-19 daily output level of 2.08mn mt. In mid-May, the blast furnace operating rate stood at 90pc and electric arc furnace operating rate was 70pc.
Construction activities have accelerated in China and consumption is gradually recovering. But steel stock reduction remains a challenge.