The unexpected rebound in China’s steel market this year is set to keep rolling because record output by mills has so far failed to replenish inventories as the government cranks up stimulus to boost growth.

Stockpiles of steel reinforcement bar, used in construction, sank for a sixth week, contracting 6.8 percent in the period to April 15 in the biggest drop since October 2014, according to Shanghai Steelhome Information Technology Co. Rebar futures in Shanghai rallied to the highest in a year on Tuesday, and are up 39 percent in 2016. Spot prices have risen 46 percent.

The rally in 2016 follows five straight years of declines and has been a welcome respite for the world’s largest steel industry, which has been grappling with overcapacity, losses and forecasts for a long-term drop in the nation’s demand. In March, mills in China churned out more metal than any month on record as the economy stabilized, with a surge in new credit spurring a property sector rebound. The surprise rally in the biggest steel producer has also helped to lift global iron ore prices.

“Mills now have their order books filled till July or onward,” said Li Qibao, an analyst at Changjiang Futures Co. in Wuhan, who predicts that prices will go on rising. There are “unmistakable signs of recovery in demand, with the help of an ‘iron rooster’-style construction boom that has come back at full speed,” Li said, referring to a nickname for China’s previous growth model as the Chinese pronunciation of the phrase translates as ‘railroad, highway, infrastructure.’

Never before have steel inventories been at such a low level around this time of year, said Gao Huaming, director for northern China at Banksteel.com. Stockpiles of rebar tracked by Shanghai Steelhome stood at 4.675 million tons on April 15. That compares with 6.84 million tons a year earlier and 8.04 million tons the same week in 2014.

Producers and traders, anticipating further losses this year, didn’t carry out their usual seasonal stockpiling in the winter, resulting in an “exceedingly low” level this spring, according to Li Wenjie, general manager at Beijing Shougang Alliance of Xingang Science & Trade Co.

Steel demand from the construction sector has been boosted by stimulus and fueled by easing credit conditions, according to Fitch Ratings. Aggregate financing was 2.34 trillion yuan ($360.7 billion) in March as easing filtered through the financial system. Home sales jumped 71 percent last month from a year ago, while investment in real-estate development rose 6.2 percent in the first quarter. Fixed-asset investment also gained.

The surge in steel prices has been a boon for mills’ shares. Wuhan Iron & Steel Co. has rallied 33 percent since a closing-low in early February. Angang Steel Co. has bounced 17 percent, even after warning this month that it still faced a first-quarter loss.

The industry’s efforts to take advantage of the rebound are being hampered by the government’s drive to cut excess capacity and reduce emissions amid what’s still the worst slowdown in a quarter-century, according to Su Feng, general manager for sales at Anyang Iron & Steel Co. The government in January pledged to cut capacity by as much as 150 million tons in five years as part of efforts to overhaul heavy industry.

In addition, the push to boost supply and take advantage of the price jump may spur a renewed downturn as output again outstrips demand. The rally in steel prices will probably fade as producers that were caught out by the surprise surge since February restart plants, Macquarie Group Ltd. forecast last month.

“Given time, output will be raised to a level that tips the market back into oversupply,” said Xu Xiangchun, chief analyst at Mysteel Research. “China’s steel industry remains in severe overcapacity, so a glut will return.”

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