Destocking for steel mills in China and steel price rise

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The plight of China's steel industry has accelerated production mode changing of steel enterprises. In 2015 destocking has been a solution to lighten burden of steel mills in China, it also become one of the support factors for steel price rise.

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Brief Introduction:
From the current listed steel companies in the annual report in 2015, most steel mills has been working on reducing their inventory. According to annual reports of the 12 iron and steel enterprise, at present only Fushun special steel, Hualing steel inventories has increased, rest steel mills are on a downward trend. Among them, Chongqing iron and steel becomes number one with 65.26% of the decline in inventories, ending inventory amount to 2.78 billion RMB, in 2014 the number is 7.99 billion RMB. Followed by is * ST eight steel with drop percentage of 61.38%. In addition, LingGang shares fell nearly half, Shagang co, Three steel min light, Masteel shares the three companies in stock fell more than thirty percent. Daye special steel, Anshan iron and Chang Bao shares fell by twenty percent, Baoshan iron & steel inventories fell by 12.30%.

From the total amount of inventory, industry leader Baosteel is in the first place with more than 23.5 billion RMB, Chang Bao has the lowest stock inventory amount. According to Baosteel annual report, inventory mainly include raw materials, in product, finished goods and spare parts, etc. Inventories are initially recorded at cost, inventory cost includes purchase cost, manufacturing cost and other places of inventory to the current spending and state what had happened.

Nub Steel Mill Inventory (billion) Rise/Down(%)
1 Chongqing Steel 2.7758 -65.26%
2 * ST Eight Steel 1.3485 -61.38%
3 LingGang 1.0215 -47.04%
4 ShaGang 0.8334 -36.96%
5 Three Steel Min light 0.8470 -32.55%
6 MaSteel 6.0184 -30.70%
7 Dazhi Steel 0.7132 -28.89%
8 An Steel 8.008 -26.30%
9 ChangBao Steel 0.5344 -21.57%
10 BaoSteel 23.516 -12.30%
11 Hualing Steel 8.0224 1.48%
12 Fushun Special Steel 2.4097 13.07%

Steel mills in China will continue destocking in 2016

According to China federation of logistics and purchasing report which released on April 1, until mid-march, China steel association member-iron and steel enterprise inventory is 13.7552 million tons, which has reduced 868800 tons than February, down by 5.94%. Compared with last year, it has reduced 359.58 tons, down by 20.72%.
Agico will make more affort than ever in helping steel mills in destocking and offer best sales service to steel plate and steel pipe buyers in 2016.

Stock market is also reduced simultaneously with steel mills reducing inventory. Compared with same period of last year, in March national steel market inventory reduction of 3.9 million tons, which is significantly lower than the level of same period last year. Side-effect of Iron and steel enterprises’ destocking has passed to steel prices. In the past three months, steel prices rebound has risen more than 30%, during the course of nearly 10 years of steel prices rebound, risen percentage is only lower than July 4-36% in 2009.


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