To get through the winter smoothly, it is urgently necessary to “slim down” steel inventories.
Currently, both steel enterprises’ inventories and societal inventories are at historically high levels in recent years. According to data from the China Iron and Steel Association, as of mid-November, the total inventory of steel products held by key statistical steel enterprises stood at 15.61 million tons, an increase of 120,000 tons from the previous ten-day period, representing a growth rate of 0.8%. Year-on-year, this figure rose by 60,000 tons, or a growth rate of 0.4%. During the same period, the total societal inventory of five major steel product categories across 21 cities nationwide reached 8.71 million tons, up 18.7 million tons year-on-year—a growth rate of 27.3%.
The author believes that this situation is closely linked to the current market dynamics, characterized by strong supply and weak demand. Data show that as of mid-November, key steel enterprises under statistical monitoring had cumulatively produced 19.43 million tons of crude steel, with an average daily output of 1.943 million tons—a 0.9% increase from the previous ten-day period. Even during the off-season, supply continues to grow. In contrast, demand has noticeably contracted due to factors such as the onset of winter, sluggish recovery in the real estate sector, and a slowdown in fixed-asset investment. Under these “one increase and one decrease,” the pressure on steel inventories has further intensified, and the risk of negative market feedback continues to accumulate. For the current market to smoothly “get through the winter,” steel enterprises must take proactive measures to reduce their inventories.
Generally speaking, persistently high steel inventories will lead to... Steel prices Prices are declining, and industry profitability is slipping. According to calculations, for every 1% increase in steel inventory, steel prices will fall by 0.47%, and industry profitability will decline by 0.54%. Practice has shown that excessively high inventories at steel enterprises not only tie up large amounts of capital but also easily disrupt the normal turnover of societal steel inventories due to concentrated, low-price sales. Precisely for this reason, steel enterprises must proactively reduce their inventories and implement precise inventory management—not only to ease the burden on the industrial chain but also to lighten their own load, thereby effectively mitigating the risk of a sharp drop in steel prices.
It is important to note that reducing inventory through pressure-driven measures is not simply a “fire-sale” approach. Rather, it involves precise inventory management that compels enterprises to move beyond the traditional business model of “producing whatever sells.” Instead, companies will proactively cut back on the production of steel products with low demand and low added value, and instead focus on high-demand, high-added-value steel products. In this process, steel enterprises can ultimately eliminate outdated, low-end production capacity, optimize their inventory structure, and accelerate their transition toward high-quality development.
However, relying solely on steel companies’ voluntary efforts to reduce inventories may not be sufficient to ensure industry profitability. Instead, coordinated efforts from multiple parties are needed—and crucially, the industry must reach a consensus. Many enterprises adopt a mindset of “rather sacrifice prices than yield the market,” making it difficult for them to proactively cut inventories. Under the continued calls from industry associations, companies need to strengthen self-discipline, establish appropriate self-regulatory mechanisms, and work together to reduce inventories. By doing so, they can jointly maintain market stability, restore industry profits, and, most importantly, avoid the “secondary damage” that “fire-sale” inventory reductions could inflict on the market.
The “Work Plan for Steady Growth in the Iron and Steel Industry (2025–2026)” also explicitly states the need to strengthen precise regulation of capacity and output, and to support industry associations in helping enterprises establish self-regulatory mechanisms. This provides a policy basis for iron and steel companies to collaboratively reduce inventory levels. At the same time, iron and steel enterprises themselves must accelerate their digital and intelligent transformation, speed up production based on sales forecasts, pursue precision manufacturing, and efficiently achieve reductions, management, and optimization of inventory levels.
In addition, upstream and downstream enterprises in the steel industry chain should deepen collaborative development by establishing industry alliances to jointly build and share databases of various steel products. Relying on industrial internet platforms, they can achieve precise matching of supply and demand, promote rational inventory turnover, and reduce inventory risks from a supply chain perspective.
In summary, reducing inventory is currently... Steel market Optimizing the supply-demand structure is not only a key measure for steel enterprises to enhance their development resilience but also an essential component for achieving win-win outcomes across the industrial chain.
