China's steel inventories have risen to a four-year high as construction steel demand weakens during the northern construction off-season, according to a report by China Business Journal. The reversal from falling to rising inventories has increased pressure on the industry to reduce stockpiles.

Su Changyong, deputy secretary-general of the China Iron and Steel Association (CISA), said China exported 85.64 million tonnes of steel in the first three quarters, down 2.6% year on year. Lange Steel noted that rising overseas trade barriers could make it difficult to sustain exports at elevated levels.

Inventory Pressure Puts Focus on Production

CISA has called on the industry to align production with demand. The appeal addresses the risk that steel continues to accumulate when supply exceeds the volume customers are buying. If weaker construction demand persists and exports provide less support, the pace at which producers adjust output could influence how quickly inventories decline.

The immediate question is whether production and sales move back into balance. Changes in construction steel demand, export volumes and inventory levels will help show whether the pressure on stockpiles is easing.