Steel Plate Market Adjustment: Prices Remain Low Amid Weak Supply and Demand
Continued Weak Supply and Demand
As winter set in, weak downstream demand gradually transmitted upstream. From late November to early December, weekly apparent steel demand dropped from 2.3 million tons to 2.16 million tons, below the level of the same period in previous years. Construction steel demand remained under pressure, with national real estate development investment falling 14.7% year-on-year from January to October, housing construction area down 9.4%, and new construction starts down 19.8%. Infrastructure construction investment (excluding electricity, heat, gas, and water production and supply) decreased by 0.1%, with the continued downturn in the real estate market continuing to drag down steel demand.
The supply side also showed contraction. In November, the scale of maintenance and resumption of production at national rebar enterprises significantly narrowed. This week, steel mills in 9 provinces were involved in production line maintenance and resumption, with 8 maintenance production lines, 4 fewer than last week, and 9 resumption production lines, 10 fewer than last week. Yonggang Steel and Zhongtian Steel successively announced mid-month plan quantity discounts, indicating limited production enthusiasm among steel mills.
Weakened Cost Support, Raw Material Prices Under Pressure
On the cost side, coking coal and coke prices showed significant declines. In mid-November, the National Development and Reform Commission organized a video conference on energy supply guarantee for the 2025-2026 heating season, and expectations of increased coal supply pushed coking coal and coke futures prices down from highs. Coking coal mine capacity utilization rates increased, Mongolia's customs clearance vehicle numbers remained high at year-end, while steel mill blast furnace operating rates decreased, hot metal production decreased, and inventories at mid- and upstream mining ends and washing plants gradually increased. Coking coal futures fell below 1,000 yuan/ton, while coke approached the 1,500 yuan/ton mark.
The iron ore market was also under pressure. Australia and Brazil's shipments were relatively stable, arrivals increased, and port inventories gradually increased. As of December 9th, total iron ore port inventories at 47 ports reached 160.2398 million tons, more than 3.6 million tons higher than the same period last year, with high inventories dragging down ore prices. Continued decline in hot metal put pressure on raw materials, and sharp declines in coal and coke significantly dragged down the futures market, continuing the weak steel operation pattern.
Accelerated Industry Structural Adjustment
Notably, China's steel industry is undergoing historic changes. Hot-rolled Rebar, which had long occupied the top spot in China's steel production and was mainly used in the construction industry, saw a significant decline in output. It was replaced by hot-rolled wide strip, mainly used in industrial manufacturing, which became the top variety. The change in the "top spot" of steel products reflects the transformation of China's economic drivers.
Feng Chao, Deputy Secretary-General of the China Iron and Steel Association, stated that although pig iron and crude steel production decreased year-on-year this year, steel consumption increased year-on-year. "This shows that we are producing more deeply processed products, and China's steel product structure and consumption structure are adjusting." Currently, steel demand from industrial manufacturing sectors such as automobiles and shipbuilding maintains good growth, and rigid and improved reasonable housing demand in the real estate market is being released in an orderly manner, but the required product structure has changed significantly.
Market Outlook: Mainly Volatile Adjustment
Looking ahead, the steel plate market may continue its volatile adjustment pattern. From a fundamental perspective, the pattern of weak supply and demand is difficult to change, with demand further weakening due to the off-season for winter construction, and supply contraction limited. On the cost side, coking coal and coke prices are declining, and iron ore high inventory pressure remains, with cost support weakening. However, in terms of inventory, as of the end of November, the total inventory of building steel in 35 cities nationwide was 462.17 million tons, a decrease of 382,100 tons from the same period last month, continuing the destocking trend since October. Low inventory provides some support for spot prices.
At the macro level, the Central Political Bureau meeting set the tone for next year's economic work, continuing to implement more proactive fiscal policies and moderately loose monetary policies, providing some policy expectation support for the market. However, in the short term, against the background of supply and demand contradictions that have not been significantly alleviated and weakened cost support, Steel Plate prices may continue to operate weakly and fluctuate. The market needs to pay attention to the subsequent reduction in production by steel mills and changes in demand.