Experts say: City – January 19

My Steel: On the supply side, last Friday, the supply of the five major steel products reached 81.921 million tons, an increase of 62,000 tons from the previous week, representing a growth rate of 0.1%. The rise in production over the past week was mainly driven by the recovery in molten iron output since the start of the year. However, due to environmental restrictions in some northern regions, the room for further production growth remains limited for now. Last Friday, the total inventory of the five major steel products stood at 12.4701 million tons, down 69,100 tons from the previous week—a decline of 0.6%. The total inventory of the five major steel products shifted from increasing to decreasing last week, but the accumulation trend has not been sustained. Looking at the inventory structure, the decline in total inventory last week was largely attributable to a drop in mill inventories, while social inventories continued to build up. On the consumption side, last week, the apparent weekly consumption of the five major steel products totaled 8.2612 million tons, up 3.7% from the previous week. Among these, construction material consumption rose by 8.6%, and plate consumption increased by 1.6%. Given the volatile yet upward trend in steel prices last week, market sentiment remained relatively optimistic. Moreover, during January—the first month of the new year—progress in issuing special-purpose bonds has outpaced the same period last year, reflecting a proactive policy stance that has helped boost steel demand temporarily. Overall, last week, the growth in supply of the five major steel products fell short of the growth in demand, leading to a decline in total inventory and indicating a fundamentally neutral-to-strong market situation. On the supply side, as we enter January, with current steel mill inventories under relatively mild pressure and profit margins remaining decent, there is still some room for molten iron production to rise in the short term, meaning that supply-side pressures for marginal recovery persist. On the demand side, although expectations of declining steel demand remain unchanged as the Spring Festival approaches, this year’s later timing of the festival, coupled with reasonably strong issuance of special-purpose bonds in January, means that downward pressure on steel demand will be relatively limited in the short term. In terms of inventory, given the expectation of rising supply and falling demand, the overall trend of inventory accumulation is unlikely to change. However, in the short term, the pressure for inventory buildup may be limited. Overall, as the off-season deepens further, expectations of weakening fundamentals for steel remain. Nevertheless, supported by increased production at steel mills and cost support from replenishing raw material inventories ahead of the Spring Festival, steel prices are likely to show a volatile but slightly upward trend.

Steel Home: Last week, domestic steel prices remained generally stable with slight fluctuations across the board, and price changes in various regions were minimal. Looking at the recent market trends, construction steel is in the off-season of seasonal demand, with purchases mainly consisting of small batches. Demand for various plate products remains steady, but inventory levels are higher than those observed during the same period last year, putting some pressure on supply. In December, steel exports reached a monthly record high, partly driven by preemptive export activities, which will likely influence January’s export performance. Blast furnace operating rates at steel mills have slightly declined, and electric furnace enterprises will soon enter a concentrated shutdown period, which should help ease supply pressures. Overall, it is expected that domestic steel prices will remain largely stable this week, with only minor fluctuations in certain markets.

Lange: In 2026, due to the slowing global economic growth, geopolitical fragmentation, persistent policy uncertainty, and heightened vulnerabilities, the momentum for global trade growth remains insufficient. As a result, China’s foreign trade development continues to face a severe and complex external environment. However, China’s economy boasts a solid foundation, numerous advantages, strong resilience, and great potential. The long-term structural conditions and fundamental trends supporting its continued healthy development remain unchanged, and the pace of innovative trade development will only become more robust. Looking at the black commodity futures markets, prices of black commodities showed mixed performance: the main contracts for rebar and hot-rolled coil edged slightly higher, while iron ore, coking coal, and coke all closed with small declines. Both “dual cokes” saw intraday declines exceeding 1%. The main rebar contract, 05, closed at 3,163 yuan per ton, up 2 points from the previous day and 19 points from last Friday’s closing price. Its weekly settlement price was 3,164 yuan per ton, up 19 points. The price center has slightly risen compared to last week. The latest open interest stood at 1.755 million contracts, an increase of 40,000 contracts from last Friday’s level, with 70,000 additional contracts added on Friday alone. Currently, the main rebar contract’s weekly trend is capped below 3,200 yuan; it has failed to achieve a meaningful breakout on two previous attempts to move higher, and short-term pullbacks and adjustments have emerged, creating a contradictory market dynamic. Therefore, this week is likely to see continued wide-range fluctuations, with a reference trading range of 3,120–3,216 yuan per ton. From the perspective of the spot steel market, on the supply side, influenced by profit margins across different product categories, steel mills have gradually increased their capacity release, leading to a slight rise in molten iron production and modest increases in output across various steel products. On the demand side, as the traditional off-season effect continues to expand, end-user demand has gradually weakened. However, thanks to the impact of targeted reserve requirement ratio cuts, both the futures and spot markets have seen some upward pressure, though market transactions have shown mixed performance. On the cost side, stable-to-slightly-rising iron ore prices, steady-to-rising scrap steel prices, and stable coking coal prices have kept production costs resilient. Consequently, the Lange Steel Research Center forecasts that, under the influence of ongoing macro-policy expectations, the expanding off-season effect, the shift from weak to stronger supply release, mixed market transaction performance, and sustained cost support, the domestic steel market will continue to experience weak fluctuations this week.

Tang and Song: This week, construction in northern regions has virtually come to a standstill due to the impact of frozen ground. Although southern regions have not yet experienced a complete halt in construction, as the wave of workers returning home accelerates in late January, actual construction intensity has significantly declined. On the export front, since January, exports of certain primary steel products have been constrained by the newly implemented export licensing system. Coupled with a slowdown in overseas demand (as reflected by the continued decline in the BDI index), the role of exports in underpinning domestic demand has become markedly weaker. Overall, steel demand is expected to contract further. On the supply side, steel companies’ profits have remained relatively stable within a narrow range, and blast furnace operating rates have shown little change. Supply is thus forecast to remain steady with minor adjustments. In terms of inventory, given that supply has yet to show any significant contraction while demand continues to decline, the supply-demand balance is trending toward greater looseness, and steel inventories have entered a seasonal accumulation phase. Cost dynamics have shown mixed trends: For iron ore, steel mills are primarily replenishing stocks on an as-needed basis, lacking any strong willingness to proactively purchase, resulting in volatile and generally weak prices. As for coking coal, some coking plants have attempted to raise prices, but steel mills remain strongly inclined to keep prices down. Consequently, coking coal prices may stabilize after hitting bottom or even see a slight rebound. Overall, steel companies’ costs remain relatively stable. On the policy front, positive signals are emerging: On January 12, the People’s Daily published an article titled “Continuously Expanding Opening-Up, Providing New Opportunities for the World,” signed by “Zhong Caiping.” This marks the sixth time that “Zhong Caiping” has appeared on the front page since January 7. Looking back to 2025, there were eight consecutive articles in the “Zhong Caiping” series; and at the start of 2026, “Zhong Caiping” took over again. Such frequent and high-profile policy announcements are no coincidence—they send a clear signal that China’s economic fundamentals are solid and its commitment to opening-up remains unwavering, providing the market with much-needed confidence and reassurance. This week, key economic data for the fourth quarter of 2025, including GDP figures, will be released. The market generally expects GDP growth to slow to between 4.3% and 4.6% year-on-year, putting short-term sentiment under pressure. Overall, the market will likely continue to exhibit the typical off-season characteristics of “stable supply but weak demand, with cautious sentiment,” lacking any substantial driving forces. Currently, the steel market presents a classic pattern of “weak reality + strong expectations.” Despite cost support and policy backing, without genuine underlying demand support, upward price momentum remains conspicuously insufficient. Combined with reduced liquidity during the off-season and cautious market sentiment, steel prices are highly likely to continue fluctuating and adjusting in the short term. For rebar futures, watch closely for support around 3090; resistance lies near 3190.

Han Weidong: Half a month has passed, and the macroeconomic environment remains favorable. Although we had hoped for a “miracle” in demand, steel demand continues to decline sharply year-on-year—consistent with our earlier forecasts. Currently, strip steel prices in Tangshan are at their lowest level in many years, more than 80 yuan below last year’s average annual price and nearly 100 yuan below this year’s average price projected by Lange Steel Network. Prices forecast by MySteel, Steel Home, and Tangsong Steel Network are about 100 yuan higher, leaving little room for further upside—less than 200 yuan at most. Over the past three winters, winter stockpiling has resulted in losses 100% of the time. Given the current situation, it’s more suitable for normal operations rather than speculation, because aside from prices, other factors are also lacking: crude steel production must fall by 5% year-on-year or be subject to policy-driven cuts. Of course, even “oversold” prices could work—but a definite drop in demand must be matched by equally certain production cuts. We’ve been telling everyone since before 2024 that once monthly crude steel output exceeds 3 million tons, prices will inevitably fall—without exception! Last year, we revised that threshold down to 2.9 million tons; this year, we’ve further lowered it to 2.8 million tons. Going forward, we’ll focus on steady operations in the market. Price declines should be viewed as “positive,” while price increases should be seen as “negative.” Let’s strive for a strong start in the first quarter!