Rebar futures fell and hot-rolled coil increased on Thursday, matching support from inventory trends. China meanwhile is set for another transfer of funds to local governments, this time to support recovery from recent flooding, Kallanish notes.

On the Shanghai Futures Exchange, the January 2021 rebar contract closed CNY 9/tonne lower than Wednesday at CNY 3,717/t ($538/t), while the October 2020 hot rolled coil contract closed up CNY 18/t at CNY 3,946/t. In Tangshan, billet prices were flat at CNY 3,400/t.

Rebar inventory levels continued to increase this week, while HRC inventories continued to decline. For rebar, overall inventories were up 2.5% to 11.59 million tonnes, according to a count by SMM. Within that, mill inventories were up 4% to 3.66mt, while social inventories were up 1.8% to 7.92mt. For HRC meanwhile, overall inventories fell -0.79% to 3.87mt. Mill HRC inventories were up 1.67% to 1.21mt, but social inventories fell -1.87% to 2.66mt.

On Wednesday, the weekly State Council meeting set out a CNY 100 billion package of funds from central and local government coffers set aside for reconstruction after floods his year. Central and southwestern China have been particularly hard hit by flooding this year and Beijing is keen for this not to derail the economic recovery. Premier Li Keqiang also made clear that funds raised through local government special purpose bonds could also be used for disaster recovery activities.