Experts say city—December 22nd

My Steel: On the supply side, last Friday, the supply of the five major steel products totaled 7.9797 million tons, down 82,500 tons, or 1%, from the previous week. Among the five major steel products, production declined week-on-week except for rebar and medium plate. The primary driver behind this decline is ongoing seasonal maintenance, coupled with some steel mills shifting their hot metal production to other products, which led to increased output in certain varieties. In terms of inventory, the total inventory of the five major steel products last week reached 12.9478 million tons, down 3.731 million tons, or 2.8%, from the previous week. The total inventory of the five major varieties declined week-on-week: mill inventories fell by a larger margin, primarily driven by rebar; social inventories also declined, with the main contribution again coming from rebar. On the consumption side, the weekly consumption of the five major varieties last week was 8.3528 million tons, down 0.5%. Among these, construction material consumption rose 2.4% week-on-week, while sheet product consumption fell 2% week-on-week. Overall, apparent consumption of the five major varieties showed a pattern of rising construction material consumption and falling sheet product consumption. On the supply side, as raw material prices have risen recently, steel mill profits continue to contract, and maintenance activities at steel mills resulted in a slight decline in the output of the five major varieties last week. On the demand side, demand remains on a seasonal downward trend, and hot-rolled coil faces greater overall pressure than rebar. Regarding inventories, the inventory of the five major steel products continued to fall by 2.8% week-on-week to 12.9478 million tons, reaching the lowest level since the Spring Festival this year. Overall, the recent strong performance of coking coal and coke has boosted the finished steel market. Coupled with the recovery of the macroeconomic environment, market sentiment has improved, providing short-term upward momentum for steel prices, which are likely to remain volatile but generally stronger.

Steel Home: Currently, the domestic steel market is experiencing generally mild fluctuations with no clear price trend. On the supply side, production of construction steel continues to decline, while plate production remains at a relatively high level. Overall, the supply-demand environment for construction steel is better than that for plates. On the consumption side, construction steel is entering the traditional off-season, and demand for industrial steel remains weak, partly due to the "trade-in" program. On the cost side, steel mills have initiated the third round of price cuts for coking coal, while iron ore prices are fluctuating slightly, causing the cost center to shift downward marginally. On the export side, the implementation of an export licensing system for steel products has helped to standardize export practices. Overall, the current drivers of the steel market remain weak, and it is expected that domestic steel prices will continue to fluctuate mildly this week.

Lange: Since the beginning of this year, the national economy has generally maintained steady operations, continuing its development trend of stability with progress. However, external factors remain highly unstable and uncertain, while domestic effective demand remains insufficient, posing numerous challenges to economic performance. We must adhere to the general principle of pursuing progress while maintaining stability, implement more proactive and effective macro policies, continuously expand domestic demand, optimize supply, enhance new growth drivers, and revitalize existing ones. We should focus on stabilizing employment, businesses, markets, and expectations, and strive to achieve both qualitative improvements and reasonable quantitative growth in the economy. Looking at the black commodity futures market, prices of black commodities have shown mixed movements, entering a phase of adjustment after an earlier rally. The main rebar contract for May closed at 3,119 yuan, flat for the day, up 50 points from last Friday’s closing price. The weekly settlement price was 3,092 yuan, down 6 points from the previous week. The latest open interest stood at 1.5688 million contracts, a decrease of 38,000 contracts from last Friday. During the week, prices opened lower but then rose steadily, hitting a low of 3,031 yuan and a high of 3,134 yuan. The rebound from the low exceeded 100 points, yet the overall trading range remained below last week’s level, and the weekly chart has not yet fully reversed last week’s downward trend. Currently, daily, weekly, and even hourly charts are relatively chaotic, lacking resonance, signaling that the market is likely to continue oscillating repeatedly without major trends emerging. This week, we should closely watch the area around 3,100 yuan for potential trading opportunities; above that, the 3,130–3,150 yuan range still faces considerable resistance. Therefore, the market is expected to remain in a narrow trading range between 3,050 and 3,150 yuan. From the perspective of the spot steel market, on the supply side, due to fluctuations in profitability across different product categories, steel mills’ capacity release has slowed down, leading to a continued decline in molten iron production, while output of specific products has varied. On the demand side, although the off-season effect is impacting end-user demand, the linkage between the futures and spot markets remains quite evident, keeping market transactions relatively resilient. On the cost side, as iron ore and scrap steel prices have experienced slight fluctuations and coke prices have slightly declined, the support provided by production costs continues to weaken. Therefore, according to the Lange Steel Research Center, under the influence of insufficient domestic effective demand, deepening winter effects, weakening fluctuations in supply release, sustained resilience in market transactions, and declining cost support, the domestic steel market is likely to continue its weak and volatile trend this week.

Tang and Song: This week, due to the continued influence of cold air, temperatures in North China and Northeast China remain low. Many regions are experiencing periods of strong winds and snowfall, making it feel bitterly cold and signaling the arrival of deep winter. In the south, temperatures were initially relatively high, with some areas reaching 18–23°C; however, around December 20, a significant drop in temperature and increased precipitation are expected, intensifying the damp and cold conditions and accelerating the onset of winter. The period from the 20th to the 21st will mark a turning point in nationwide weather patterns, as cold air moves southward from the north, bringing an end to the "warm winter" situation in the south. Currently, we are nearing the end of the traditional off-season for consumption. Coupled with the southward advance of cold air and increasing rain and snow, construction activities at the terminal end have noticeably slowed down. On the supply side, although steel mills have been undergoing maintenance and other disruptions leading to a decline in molten iron production, driven by factors such as profitability, some steel mills still exhibit considerable flexibility in releasing capacity, leaving limited room for further production cuts. Independent electric arc furnace mills continue to enjoy decent profits, and rebar production has slightly rebounded. It is expected that supply conditions will remain relatively stable this week. In terms of inventory, with supply steady but demand weak, the pace of inventory reduction has slowed down. Regarding costs, iron ore port inventories have risen for four consecutive weeks, hitting a new high since mid-March 2022, putting significant upward pressure on prices. Coking coal prices may face a third round of price reductions, pushing the center of coking coal prices lower and weakening cost support for steel products. Recently, macroeconomic developments have frequently made headlines: detailed policies aimed at expanding domestic demand are being formulated and are expected to be released soon; real estate “interest subsidy” support measures are anticipated to take effect shortly; efforts to curb “internal involution” in the coal industry are gaining momentum; and expectations of interest rate cuts have once again intensified. These multiple positive factors are driving a noticeable rebound in market sentiment. At present, market attention across all dimensions is highly focused on the potential benefits of policy measures, and expectations for steady growth initiatives have significantly risen. However, as these expectations have fully taken hold, there is relatively limited room left for further speculation. In the next phase, the market’s focus will gradually shift from “expectation-driven” to a period of observing the actual implementation and effectiveness of policies. From the spot market perspective, steel inventories continue to decline, demonstrating overall resilience. Nevertheless, it is important to be alert: the seasonal off-season is accelerating, and most regions across the country will officially enter winter in late December (if this transition fails to occur as scheduled, it could set a new record for the latest-ever onset of winter, prolonging market trends). Low-temperature rain and snow will impose substantial constraints on construction activities. Although some localized areas are seeing a rush to complete projects before year-end, providing short-term support for demand, this cannot reverse the overall downward trend. Moreover, external demand pressures are mounting: starting January 1, 2026, the state will implement export licensing controls on steel products. Combined with the natural slowdown in domestic demand, the steel market could face a dual weakening scenario—both domestic and foreign demand—in January. Overall, the current market has relatively limited room for further policy-driven speculation. Although short-term sentiment remains strong, the underlying fundamentals supporting prices are facing marginal weakening. We recommend maintaining caution at higher price levels. For rebar futures, watch closely for support around 3090 yuan per ton and resistance around 3150 yuan per ton.

Han Weidong, Youfa Group: Last week, I attended the annual partner conference of Youfa Group, themed “The Journey,” in Nanning, Guangxi. Amidst a warm and hopeful atmosphere, I brought my professional career to a graceful close and embarked on a new chapter in my life. In the welded pipe industry, the top ten companies account for over 80% of the market share—a figure that represents the dream of the entire steel industry. The welded pipe sector is one that will always need steel traders; this is the dream of steel traders across the country. Since its inception, this company has never suffered a loss—this is the dream of every enterprise... Let me briefly touch upon the current market situation: total inventory continues to decline, indicating that the supply-demand imbalance hasn't yet intensified. However, total inventory remains 2 million tons higher than the same period last year, and once inventory starts to rise, the market will face significant challenges. Currently, prices are only tens of yuan away from the previous low point, placing them in a low-price range—but there’s no value in winter stockpiling at this stage. Demand remains substantially lower than the same period last year, and production is gradually declining, leaving the market temporarily in a state of weak equilibrium. From a strategic perspective, we should continue to pursue prudent management; right now, there’s absolutely no room for speculation in the market.