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The domestic spot steel market continues to show signs of weakness, with market confidence still lacking. At this point, the prices of construction steel have come very close to cost levels, and the willingness of downstream merchants to cut prices may not be as aggressive as before. A new round of ex-factory price adjustments by leading construction steel producers has been launched, with some companies implementing “pan plate†pricing strategies. As the weather warms up, more construction sites are expected to resume operations, which could lead to a gradual improvement in demand.
According to the latest market report from industry agencies, the total social inventory of major steel products has been rising for several consecutive weeks and has now reached a new high in recent years. Despite this, the release of demand from the steel sector remains uncertain, and optimism about a quick recovery is still limited. In the construction steel market, prices have dropped significantly, with cities like Hefei, Nanchang, and Changsha experiencing price declines of between 110 to 190 yuan per ton. After the Lantern Festival, many traders reported sluggish market activity and little change in turnover. The growing social inventory has created psychological pressure on businesses.
In the plate market, weakness persists, with prices continuing to fall. Cities such as Changsha, Tianjin, Shijiazhuang, and Xi’an saw more pronounced drops, with prices falling by around 80 yuan per ton. Overall market turnover remains weak, and sentiment among traders is pessimistic. Even as prices continue to decline, downstream buyers remain hesitant, showing low purchasing enthusiasm. The price of hot-rolled coils has fallen sharply, but the rate of decline has started to slow down. Market participants believe that there is still insufficient support for end-user demand.
Moreover, during the Spring Festival holiday, market inventories increased significantly. Some businesses with tight cash flows and high stock levels have begun to sell off their goods to ease financial pressure. For the second trading week after the Spring Festival, the spot steel market’s confidence was hit due to the lack of significant demand recovery, high steel mill output, and a rapid rise in social inventory. Prices for all major steel products fell across the board, with the decline only showing slight signs of slowing by the weekend.
The average daily crude steel output nationwide exceeded 2 million tons in mid-February, marking the first time since October last year. This surge in production adds to both output and inventory pressures, while demand from downstream industries remains difficult to predict. Given the ongoing overcapacity in the steel sector, even if the macro economy shows signs of recovery, it may not be enough to fundamentally improve the overall performance of the steel industry. As a result, the steel market is likely to remain in a phase of weak consolidation for the foreseeable future.