Experts say city—March 2

My Steel: On the supply side, last Friday, the supply of the five major steel products reached 7.9677 million tons, down 79,800 tons from the previous week, representing a 1% decline. Among the five major steel products, production declined week-on-week except for cold-rolled and medium-to-thick plates. The primary driver behind this trend is the overall decline in demand and increased market uncertainty, prompting some steel mills to adopt suboptimal production levels. In terms of inventory, total inventories of the five major steel products stood at 18.4611 million tons last week, up 1.3427 million tons from the previous week, a 7.8% increase. Week-on-week, inventories of all five major product categories rose: mill inventories increased, with rebar contributing most significantly to this rise; social inventories also rose, again largely driven by rebar. On the consumption side, weekly consumption of the five major steel products totaled 5.6464 million tons last week, down 10.9%. Among these, construction material consumption fell 47.6% week-on-week, while plate consumption dropped 0.3% week-on-week. Overall, apparent consumption of the five major steel products showed a double-digit decline in both construction materials and plates. On the supply side, production of the five major steel products declined last week, with the largest reductions concentrated in rebar and wire rod. This was due to a declining weight of real estate in the economy, slower growth in infrastructure investment, an overall drop in demand, and heightened market uncertainty, leading some steel mills to operate below capacity. On the demand side, affected by the Spring Festival, weekly domestic demand fell week-on-week last week. We are closely monitoring the recovery in demand after the festival. According to a survey conducted by Centennial Building Research, as of February 25 (the ninth day of the first lunar month), the resumption rate of 10,692 construction sites nationwide reached 8.9%, up 1.5 percentage points year-on-year. Labor participation rate stood at 15.5%, an increase of 3.7 percentage points year-on-year; funding availability reached 29%, up 9.4 percentage points year-on-year. Although the number of ongoing construction projects has generally declined, other indicators remain better than in previous years. Regarding inventories, the overall pace of inventory accumulation narrowed somewhat compared to the previous week. Overall, the fundamental supply-demand situation for steel products remains weak on both fronts. Some steel mills are operating below capacity while demand has yet to pick up. Among them, hot-rolled coil inventories face particularly significant pressure. We expect steel prices to remain volatile and relatively weak in the short term, and we will pay close attention to developments surrounding the Two Sessions.

Steel Home: After the holiday, China’s steel market has generally been operating on the weaker side. Currently, downstream demand has yet to fully pick up, leaving the steel market in a broadly balanced but weak state. Looking at the influencing factors: First, steel mills continue to ramp up production; blast furnace utilization rates have slightly increased following the holiday, and electric arc furnace enterprises will resume operations in large numbers after the Lantern Festival. Based on current utilization rates and output estimates from key enterprises, crude steel production is expected to rise month-on-month, though still lower than the same period last year, meaning supply pressure remains manageable. Second, this week marks the convening of the Two Sessions; in line with previous policy signals, fiscal policy is likely to be relatively strong. As for negative factors: First, inventories have surged significantly after the holiday—especially for various types of sheet products, which have reached record highs for this time of year, putting downward pressure on inventory levels going forward. Second, port iron ore stocks have hit an all-time high, and independent coking coal enterprises face inventory reduction pressures following the holiday, keeping cost pressures persistently high. Overall, we expect domestic steel prices to show slight fluctuations this week. Key areas to watch include changes in steel inventories, steel mill production levels, and the government work report’s implications for economic forecasts and policy intensity.

Lange: As 2026 marks the beginning of the 15th Five-Year Plan, macro policies will continue to exert strong efforts to stabilize growth and expand domestic demand, providing solid policy support for the steel market. In March, a key national conference was held, signaling that policies aimed at stabilizing growth, supporting the real estate sector, and expanding domestic demand will be further implemented and yield tangible results. Special-purpose bonds and special government bonds will play an increasingly proactive role, while accommodative monetary policies will maintain reasonably ample liquidity, thereby ensuring sufficient funding for infrastructure and manufacturing investments. In terms of industrial policy, the ongoing regulatory efforts to “reduce volume and improve quality” in crude steel production continue to optimize the supply-demand structure of the market. The new policy on steel export licenses is driving the industry’s transformation from “winning by quantity” to “breaking through with quality,” thereby enhancing its long-term competitiveness. Meanwhile, local governments are continuously stepping up their efforts to stabilize the real estate sector: first-tier cities have relaxed restrictions on property purchases and loans, and introduced tax and fee reductions, gradually boosting demand in the real estate market and stabilizing market expectations for steel consumption. The sustained release of favorable policies will help improve market sentiment and provide support for a temporary rebound in steel prices. Based on the above analysis, the domestic steel market is expected to enter a phase of “increased supply and demand, driven by the peak season” in March 2026. On the demand side, recovery is gradually taking hold; inventories are entering a destocking cycle; and the continuous implementation of supportive policies is serving as the market’s core underpinning. However, factors such as weak global demand, recovering supply, and limited cost support continue to exert downward pressure, resulting in an overall market trend characterized by “temporary rebound amid ongoing pressure.” It is crucial to closely monitor key variables including the actual realization of demand, the pace of steel mills’ resumption of production, the speed of inventory destocking, and fluctuations in raw material prices. We should remain vigilant against potential risks such as weaker-than-expected demand, overly rapid increases in supply, and slow inventory destocking.

Tang and Song: This week, the market has entered a steady phase, with an overall pattern of “both supply and demand increasing.” While spot and futures prices for black commodities remain supported, the extent of their upward movement is limited, and they are likely to continue fluctuating and adjusting. On the supply side: The supply trend shows a slight upward movement. During the Two Sessions, blast furnaces in the Tangshan region were subject to production restrictions, which may lead to a modest decline in the operating rates of long-process steelmaking lines. However, production resilience remains intact. Electric arc furnace steel mills have gradually resumed operations, boosting rebar output and resulting in a slight increase in overall steel supply. On the demand side: End-demand is recovering slowly, with trade demand and end-user inventory replenishment gradually picking up, driving a corresponding rise in procurement volumes. Downstream enterprises are resuming production and operations; construction sites and manufacturing plants are back in full swing, sustaining the recovery momentum in demand. In terms of inventories: The pace of demand recovery lags behind the rebound in supply, leading to continued accumulation of steel inventories in society, keeping social inventories on an upward trajectory. Factory inventories, influenced by the warming of end-user purchases, may see a slower rate of growth. On the cost side: At the raw material end, steel companies are gradually resuming production, increasing pig iron output, and maintaining robust demand for basic raw materials. Spot prices for coking coal remain largely stable, while iron ore prices are experiencing volatile adjustments. Steel production costs continue to be supported, somewhat limiting the downward room for steel prices. At the macro level: Focus on policy expectations from the Two Sessions and the 2026 GDP growth target provides support for market sentiment. Expectations for post-holiday resumption of work are heating up, injecting upward momentum into the market. However, constrained by limited demand recovery and rapidly accumulating steel inventories, the market finds it difficult to achieve significant breakthroughs, and overall exhibits a pattern of volatile adjustment. This week, we expect major steel product prices to fluctuate within a narrow range. Production restrictions during the Two Sessions and policy expectations provide support for steel prices; yet, limited demand recovery and persistent inventory accumulation cap the upside potential. Prices find some bottom support but lack strong upward momentum. Imported ore prices are expected to remain volatile; coking coal prices may stay relatively stable for now. For rebar futures, watch closely for support around 3,030 yuan/ton at the lower end and resistance around 3,120 yuan/ton at the upper end.

Han Weidong: After the holiday, major websites have released post-holiday inventory data, showing that inventories—measured in terms of the lunar calendar—have increased by several million tons year-on-year. In particular, hot-rolled coil and strip steel inventories in Tangshan have already surpassed peak levels seen in previous years. In the later stages after the holiday, everyone should pay close attention to this year’s “mismatch” in holiday timing: the 15th day of the first lunar month falling in March will lead to a year-on-year increase in demand based on the lunar calendar, while demand based on the Gregorian calendar will likely decline year-on-year. The peak inventory figures in the later period and post-restart production levels will be crucial. It’s certain that demand based on the Gregorian calendar will decline year-on-year in March and April this year. Currently, the biggest positive factor is that steel prices remain at low levels—already below the price levels seen during the first half of 2017, when “strip steel” was still prevalent. Raw material and fuel prices are also hovering around relatively reasonable levels. Most steel mills are currently operating at a loss (with an average loss of 100 yuan per ton last year). In the short term, the two sessions’ phased production restrictions and the 14th Five-Year Plan provide some temporary boosts to market sentiment. The ultimate long-term positive factor is the supply-side reform policy aimed at curbing internal competition—a development that’s highly likely to materialize. On the other hand, the biggest negative factors include high inventories, weak demand, and relatively high production levels. However, price risks aren’t particularly severe; even if prices were to fall, the industry could still weather the downturn. Last year, the market experienced a year-long period of volatility, with only two months seeing fluctuations exceeding 100 yuan. This year, too, the market is likely to remain volatile. If efforts to curb internal competition succeed, the market could break upward. Moreover, if the central bank achieves its goal of “price recovery,” steel valuations would also rise. Overall, there’s no need for excessive pessimism this year—at most, the market may just be more subdued. The real challenge this year is making money—it’s becoming increasingly difficult to turn a profit. Therefore, instead of placing high expectations on the market, everyone should focus inward and work harder to improve profitability.