Experts say city—January 5

My Steel: On the supply side, last Friday, the supply of the five major steel products reached 81.518 million tons, an increase of 1.836 million tons from the previous week, representing a growth rate of 2.3%. The rise in production last week was mainly driven by several steel mills that concluded their year-end maintenance and began ramping up production, indicating that supply-side pressure is on the rise. Last week, the total inventory of the five major steel products stood at 12.3215 million tons, down 2.584 million tons from the previous week, or a decline of 2.1%. Although the total inventory of the five major steel products continued to fall last week, the pace of decline narrowed slightly compared to the previous week. Looking at the inventory structure, the narrowing of the overall inventory decline last week was largely attributable to a slower reduction in social inventories, while factory inventories actually saw an expanded decline. On the consumption side, last week, the apparent weekly consumption of the five major steel products totaled 8.4102 million tons, up 0.9% from the previous week. Among these, construction material consumption rose by 0.1%, while plate consumption increased by 1.3%. As last week was just before the New Year holiday, downstream users had some weak restocking demand ahead of the holiday period, which helped boost steel demand last week. However, due to weather conditions, the rebound in construction material demand was smaller than that of plate consumption. Overall, last week saw both supply and demand for the five major steel products increasing, with the pace of inventory decline slowing down, resulting in a neutral bias in fundamentals. On the supply side, as we enter January, molten iron production is expected to show a seasonal upward trend; thus, the bottom of production may have already been reached, and supply pressures will further intensify in the coming period. On the demand side, as the off-season deepens, there will be greater room for steel demand to decline—especially for construction materials—and the pace of this decline could accelerate in the later stages. Regarding inventories, given the expectation of rising supply and falling demand, the turning point for total inventory is approaching, and steel will enter a phase of accumulating stocks. Overall, as the off-season continues to deepen, downward pressure on steel fundamentals will intensify. However, during the off-season, increased macroeconomic disruptions coupled with cost support will lead to greater volatility in steel prices.
 

Steel Home: Last week, domestic steel prices remained stable with a slight upward trend. On the positive side of the current steel market: first, domestic steel inventories have been declining for ten consecutive weeks, bringing supply and demand into basic balance; second, recently, the operating rates of both blast furnaces and electric arc furnaces have continued to drop, leading to increased production cuts and maintenance at steel mills, thus easing pressure on resource supply. On the negative side, the main factor is the off-season for consumption, with weak downstream demand. Trading volumes of major steel products have recently remained persistently low and fluctuated at low levels, prompting traders to adopt a more cautious approach and primarily operate with low inventory levels. It is expected that this week, domestic steel prices will remain stable with minor fluctuations.

Lange: Currently, China’s economy is generally stable and showing steady progress amid ongoing stability. However, demand contraction driven by market forces remains significant, and enterprises continue to face numerous challenges in selling their products. It is imperative to boost enterprise order growth effectively through sufficiently robust government investment in public goods, thereby stimulating both corporate and social investment, boosting employment, and enhancing household consumption. This will enable the systematic efforts to expand domestic demand and reverse the contraction in market demand to yield tangible and rapid results, thus continuously improving market expectations and helping China’s economy swiftly enter a sustained recovery trajectory driven by steadily warming demand. Looking at the black-series futures markets, most black-metal varieties have shown narrow-range weakness. The main rebar contract for May closed at 3,122 yuan per ton, down 15 yuan from the previous day and up 4 points from last Friday’s closing price. The weekly settlement price was 3,134 yuan per ton, up 11 points. The latest open interest stood at 1.505 million contracts, down 29,000 contracts from last Friday. Affected by holiday factors and limited price fluctuation ranges, investor interest in holding positions has declined. On the weekly chart, prices have been consolidating sideways for two consecutive weeks, with opening and closing prices remaining relatively close. At present, the market trend is rather stale; this week, we should continue to pay close attention to the resistance level around 3,150 yuan per ton. If the price fails to break through this level effectively, there is a risk of a downward pullback toward the 3,100-yuan-per-ton mark. From the perspective of the spot steel market, on the supply side: due to profit-and-loss impacts across different steel product categories, steel mills’ capacity release has continued to slow down, resulting in a sustained decline in molten iron production while output of certain steel products has seen mixed trends—some increasing, others decreasing. On the demand side: although the off-season effect continues to intensify and end-user demand gradually weakens, pre-holiday stocking demand has picked up somewhat, leading to a modest increase in market transactions. On the cost side: thanks to a slight rise in iron ore prices, moderate fluctuations in scrap steel prices, and stable coking coal prices, production costs remain resilient. Therefore, the Lange Steel Research Center forecasts that, under the combined influence of concentrated policy stimulus, the deepening off-season effect, heightened pre-holiday stocking demand, continued weakening of supply releases, rising market transactions, and resilient cost support, the domestic steel market this week is likely to experience a relatively strong but volatile trading pattern.
 

Han Weidong: In December, steel demand fell by around 5% year-on-year, marking the fifth consecutive month of roughly 5% decline in China's steel demand. In December, welded pipe exports plunged by more than 30%, though it remains unclear how steel exports performed overall. On December 30, Morgan Stanley predicted that China's total auto sales in 2026 would decline by 5%—with domestic sales dropping by 7%—and that first-quarter sales would fall by 35% quarter-on-quarter. Based on the downward trend in fixed-asset investment since August, the decline in steel demand, and adjustments to export policies, we estimate that total domestic and export demand for steel in 2026 will drop by 3% to 5%. We have not factored in the anticipated decline in auto sales (since from January to November this year, auto sales still grew by 11.4%), whereas household appliance sales have already begun to decline. Currently, most institutions and industry players are generally unprepared for a substantial drop in demand—they’ve been anticipating only a modest decline, which is essentially just a matter of scale. Moreover, from January to November, profits of industrial enterprises above designated size in China rose by only 0.1%, reflecting the growing difficulty of making money. Therefore, all enterprises must carefully plan and prepare their strategies for 2026.