Market intelligence indicates that as year-end approaches, some steel producers have initiated production halts for maintenance, leading to reduced output. Boosted by rising futures prices, speculative demand has surged temporarily. Consequently, construction steel has demonstrated stronger-than-expected performance during the off-season despite overall supply pressures remaining manageable.

As of December 4, data shows the national average price of construction steel reached 3,207 yuan per ton, up 2.09% from early November. On the supply side, weekly construction steel output has declined significantly. Year-end maintenance schedules have increased, inventory continues to be absorbed, and supply-side pressure has eased. On the demand side, while rigid demand in northern regions has weakened due to cold weather, the market remains relatively strong. Speculative demand activity has increased, providing support. Macroeconomic news suggests that December market expectations for Fed rate cuts and positive outcomes from macroeconomic meetings may boost market sentiment.

With supply-demand imbalances not prominent, current production enterprises face reduced warehouse pressure. Additionally, some steel mills in Northwest and Northeast China have announced winter stockpiling policies. As the winter stockpiling season approaches, mills exhibit strong price-supporting intentions. Current production remains unprofitable for manufacturers. Data indicates that on December 4th, the pre-tax gross margin for rebar in Hebei's construction steel sector was a loss of 101 yuan/ton, a 23% increase compared to early November. Overall, corporate profit levels remain low, and year-end maintenance intentions among producers are rising.

As of December 5, 26 construction steel producers nationwide plan maintenance shutdowns in December, involving 19 blast furnaces and over 18 production lines. This is expected to reduce daily output by 45,400 tons of construction materials and 54,000 tons of molten iron. Planned shutdowns are concentrated in North China, Southwest China, Northwest China, and Central China, potentially further decreasing December's construction steel output. Driven by the production decline, inventory pressure at producers is gradually easing. As of December 5, inventory at 102 sampled construction steel producers stood at 2.3039 million tons, down 26.06% from early November.

Overall, construction steel supply pressure has eased since December began. Plant shutdowns for maintenance, declining output, and continuous inventory reductions provide some market support. On the cost front, coke prices are expected to enter a third round of reductions soon, potentially lowering production costs. However, with producers currently operating at a loss, the bearish impact of costs on the market is anticipated to be limited. On the demand side, colder weather in northern regions is gradually shrinking rigid demand. Yet, speculative demand activity has increased, and some producers have initiated winter stockpiling activities. Expectations that colder regions will gradually begin winter stockpiling or shift resources southward may bolster the willingness of both the market and steel mills to maintain prices.

Therefore, for this month, while supply-demand imbalances persist in the construction steel market, the pace of their resolution is accelerating. Driven by market sentiment, construction steel prices are expected to trend upward with volatility. Increased maintenance activities will help break the current oscillation pattern, paving the way for a stronger upward movement.

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