Experts say: December 29

My Steel: As the off-season gradually deepens, there is limited room for further improvement in demand for rebar and hot-rolled coil. Going forward, as seasonal demand weakens, steel inventory pressure is likely to continue building up. On the rebar front, steel mills’ profits remain relatively healthy overall, and some enterprises have plans to resume production after the New Year. We estimate that short-term output still has room to rebound. In terms of consumption, southern regions will continue to provide support in the short term, while northern regions are entering the off-season, and consumption is expected to decline further in the later period. As for hot-rolled coil, this week is expected to maintain a modest pace of inventory reduction, with a slight drop in apparent demand. Overall, the underlying supply-demand imbalance has not yet become evident. However, current production levels are still expected to rise, and once demand further declines during the off-season, inventory pressure will intensify even more.

Steel Home: Currently, domestic steel prices are trending steadily but slightly weaker. Overall, there is a lack of strong upward or downward drivers, and the steel market is exhibiting a state of weak equilibrium. On the supply side, recently, the operating rates of both blast furnaces and electric arc furnaces in China have continued to decline, easing the pressure on resource supply. On the demand side, as we approach year-end, downstream demand remains largely stable, and the impact of off-season demand on the market is not significant. Steel mills have successively introduced winter stocking policies, yet traders remain relatively inactive. On the cost side, the third round of coking coal price cuts has taken effect, while iron ore prices remain relatively firm, resulting in little change in steel mills’ production costs. It is expected that domestic steel prices will continue to trend steadily but slightly weaker this week.

Lange: The current external environment is undergoing deepening changes. Global economic growth lacks sufficient momentum, trade barriers are on the rise, and major economies are showing divergent economic performances. Moreover, there is considerable uncertainty surrounding inflation trends and monetary policy adjustments. China’s economy continues to operate generally steadily, with steady progress and new achievements in high-quality development. However, it still faces prominent challenges and problems, such as a stark contrast between strong supply and weak demand. To address these challenges, we must continue implementing moderately accommodative monetary policies, intensify counter-cyclical and cross-cyclical adjustments, better leverage the dual functions—both aggregate and structural—of monetary policy tools, strengthen coordination between monetary and fiscal policies, and promote stable economic growth and a reasonable rebound in prices. Looking at the black commodity futures market, overall performance has been relatively weak. The main contracts for coking coal, coke, rebar, and hot-rolled coils all closed lower on Friday, with only iron ore posting a slight gain. The main rebar contract, 05, closed at 3,118 yuan per ton, down 13 points from the previous day and 1 point from last Friday’s closing price, yet up 31 points from the weekly settlement price. The latest open interest stood at 1.534 million contracts, down 35,000 contracts from last Friday. Open interest has continued to decline over the past week, leaving little room for trading activity. Currently, the weekly chart shows a doji candlestick, making market positioning increasingly difficult. The daily chart has yet to turn stronger and remains suppressed below 3,150 yuan. With only three trading days remaining this week, upward momentum is weak. Traders should be wary of another pullback and focus on the 3,100-yuan support level. This week’s expected trading range is 3,050–3,156 yuan. In the spot steel market, on the supply side, due to profit-and-loss impacts across different product categories, steel mills have further reduced their capacity release efforts, leading to a continuous decline in molten iron production while output of certain products has shown mixed trends—increasing for some and decreasing for others. On the demand side, seasonal weather conditions are exacerbating the off-season effect, causing terminal demand to weaken gradually. Market transactions show a pattern of weaker construction materials and more resilient sheet metal products. On the cost side, although iron ore prices remain stable but tend to weaken slightly, scrap steel prices remain stable but show a tendency to strengthen, and coking coal prices have fallen modestly. As a result, production costs are losing their supportive strength. Therefore, the Lange Steel Research Center forecasts that, under the influence of domestic supply-demand contradictions, the expanding winter effect, continued weakening of supply releases, a market characterized by weaker construction materials and more resilient sheet metal products, and diminishing cost support, the domestic steel market is likely to continue its weak, volatile, and downward trend this week.

Tang and Song: This week marks the New Year’s Day mini-holiday. In the north, severe cold and freezing temperatures persist, bringing outdoor construction activities to a near standstill; in the south, overcast, rainy, and damp conditions have led to a noticeable seasonal weakening in end-demand. Meanwhile, starting January 1, the steel export licensing system has been officially implemented, tightening export procedures and putting downward pressure on external demand in the short term. On the supply side, steel mills have seen a slight decline in operating rates due to environmental production restrictions and scheduled maintenance at some plants. With environmental restrictions now fully enforced and steel mills experiencing only moderate profit losses, there is limited room for further production cuts. Independent electric arc furnace mills have begun to see profit recovery, leading to a modest increase in rebar output. We expect supply levels to remain relatively high this week. As for inventories, the combination of holiday effects, shrinking demand, and adjustments to export policies has significantly slowed the pace of inventory destocking, resulting in a marked deceleration in inventory declines. This week may mark a turning point, shifting from inventory destocking to inventory accumulation. On the cost front, iron ore port inventories continue to accumulate, maintaining a loose supply situation. Coupled with the approaching delivery period, there is insufficient upward momentum driving iron ore prices. As for coking coal, the third round of price cuts has largely been implemented, and a fourth round of cuts cannot be ruled out. Overall, the raw material side lacks strong underlying fundamentals, steel costs lack solid support, and the upward pull on price floors is weakening. Recently, positive macroeconomic signals have been frequent: The central bank emphasized “continuing to implement moderately accommodative monetary policy and stepping up counter-cyclical and cross-cyclical adjustments”; Beijing has optimized and adjusted its housing purchase restrictions. However, it’s difficult for these policy measures to quickly translate into demand in the physical steel sector. The macroeconomic positives are more likely to act as “support without boosting,” making it hard in the short term to reverse the weak supply-and-demand fundamentals. In summary, the current market is at a stage of policy-supported bottoming-out but facing reality’s weakness—a tug-of-war between two forces: On one hand, positive macro signals are boosting sentiment; on the other hand, demand is substantially shrinking, exports are constrained, and inventory turning points are approaching, causing fundamental support to weaken marginally. Although prices may experience short-term fluctuations driven by expectations, lacking accompanying trading activity and destocking, upward room is limited. We recommend exercising caution when prices rebound to higher ranges and prioritizing inventory control. For rebar futures, watch for support around 3090 yuan per ton and resistance around 3150 yuan per ton.

Han Weidong, Youfa Group: This weekend marks the start of a brand-new year! This year has seen the smallest price fluctuations in the steel industry ever. In Tangshan, the average annual price of strip steel hovered around 3,200 yuan, with monthly averages falling dozens of yuan below 3,200 for five months and rising dozens of yuan above for another five months. It wasn't until August—when anti-involution measures took effect—that prices reached 3,340 yuan; in the month of negative feedback, prices even dipped as low as 3,080 yuan. Yet this year has been one of the most extraordinary we’ve ever experienced: the global free-trade system has been shattered by the U.S., Sino-U.S. trade tensions have reached an all-time high, China’s fixed-asset investment has posted negative growth for several consecutive months, and domestic steel demand has declined year-on-year for five straight months in the second half of the year. The steel industry has hit a historic turning point in both production and demand, while iron ore supply and demand have also reached inflection points—and coal supply and demand have followed suit. During periods of negative feedback, coal mine prices were driven down to rock-bottom levels. Meanwhile, China’s CPI has been in negative territory for nearly three consecutive years... But let me emphasize: despite all these once-in-a-century factors, steel prices have “stabilized.” So, when it comes to the future, our real risks and challenges aren’t price fluctuations! There’s no need to dwell on market volatility anymore. Instead, let’s focus on how we can operate effectively to survive and make profits. Winter stockpiling is a “product of our times”—a response to the delicate balance between supply and demand in the steel industry, where supply falls short of demand. The key is to pay close attention to our own genuine needs. We must shift from relying on market conditions for profit to embracing new business models and operational strategies that generate profits. As the New Year approaches, I wish you all a happy and prosperous 2026—a bright and successful start to the year!