China’s steel products market has seen remarkable on-year inventory growth at the peak season of sales, signaling demand hasn’t improved substantially or outperformed anticipation.

According to statistics of steel products inventory in some cities given by My Steel, a website offering complete information about China’s steel industry, the inventory of hot-rolled plates increased 42 percent on year by the end of May; that of medium and heavy plates, up 26 percent; and that of construction steels, up 10 percent.

Statistics released by China Iron & Steel Association show that China’s apparent consumption of steel products reached 170.65 million tons in the first four months of this year, up 10.95 million tons or 6.86 percent over the same period of last year.

According to Xu Xiangchun, analyst with My Steel, the over 10 million-ton growth of steel products inventory reflects that the new production capacity hasn’t transformed into consumption, thus leading to more inventory.

The domestic price of steel products has kept climbing for six weeks, particular after the agreement of the benchmark price of iron ore in international market. Domestic major steel enterprises have lifted ex-factory prices of their products by 150-350 yuan per ton.

Analysts hold the upward adjustment of steel price will ease pressures of losses, but the possibility of price plunge cannot be ruled out if the inventory keeps rising.

Local governments are adding support to steel enterprises now. For example, the city of Wuhan, central China’s Hunan province, will offer 20 yuan per ton subsidy for direct purchase of Wuhan Iron and Steel (Group) Corp.’s products.

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