Both the steel production and coal stock data have been released in a relatively timely fashion following the end of the Golden week that consumed much of the first 10 days of the month. Both suggest activity was decent, although inventories did increase particularly for coal.
Steel production is estimated to be down a little from the end of September, although is still growing a solid YoY clip. The comps here may slow a little given the strength in steel production YTD and the improvement we saw this time last year, but either way the steel economy continues to travel pretty well.
Coal stocks continued to rise and now stand at 77.3mt and 23 days of consumption at key power plants.
The data does imply that coal burn is quite a bit better YoY, rising at ~10%YoY over the last 30 days or so. Around 0.5mt of the 4mt stock build has come out of port inventories, but clearly supply has been strong enough to build consumer stocks across the country.
This maybe trickier now that Daqin railway maintenance is underway, although mid October is hardly a boom period for consumption. That said, power plants need to continue building stock if current consumption trends persist. The current level of inventory is around 17 days of December consumption, should it continue to grow at 10%YoY.
