Retreating Chinese Steel Stockpiles a Positive for Iron Ore Demand – EastGate

Chinese steel stockpiles reached record highs amid the coronavirus outbreak, but are now steadily easing. This paints the picture of an increased construction activity and a growing seaborne demand for the key dry bulk commodity of iron ore, says EastGate Shipping Inc. Demand returning to normal levels Steel inventories in China have been showing a steady downward trend following the all-time highs recorded in mid-March. The virus crisis triggered a nationwide lockdown halting most manufacturing and industrial activities. Subsequently, demand for steel products was negatively affected. However, blast-furnace mills are designed to run constantly which essentially meant that while demand declined substantially amid logistical constraints, steel output continued, leading on March 13th to a record high of steel inventories to the tune of 26.1 million tonnes. By end of March, most Chinese manufacturers have been back to business as usual, drawing from the inventories built over the previous weeks. This was translated into a significant slide in the steel stockpiles by mid-April, down by 12.6% on week 15.