This week, the average tax-inclusive billet cost for major steel mills in Tangshan stood at 3,055 RMB/ton, down 10 RMB/ton week-on-week. Compared to the December 17 ex-factory price of 2,940 RMB/ton for plain square billets, mills incurred an average loss of 115 RMB/ton. The ferrous metals sector rebounded, with coking coal and coke leading gains. Construction steel transactions reached 99,500 tons on the 17th, showing sequential improvement. This week's data from Bugoo.com indicated increased production of construction materials and hot-rolled coil, with construction materials expanding at a faster pace. Total steel inventories continued to decline, with significant destocking in social inventories, maintaining last week's overall destocking rate. Apparent demand for construction materials slightly decreased, while hot-rolled coil demand slightly increased, indicating sustained underlying demand support.
This week's pig iron output is expected to continue declining, though blast furnace profits have recovered somewhat, potentially triggering targeted production increases toward month-end. December coal mine supply may contract again due to environmental factors, while mills anticipate restocking. Structural shortages of PB fines support steel production costs. Despite seasonal declines in construction material demand, manufacturing demand remains resilient. Short-term exports are expected to stay elevated due to export license management for steel products. Steel prices may trend upward amid raw material restocking, though seasonal factors will temper performance relative to November.
The Central Economic Work Conference outlined next year's economic priorities, emphasizing continued implementation of a more proactive fiscal policy and appropriately loose monetary policy. Unlike the Politburo meeting, which did not directly mention real estate, this conference specifically called for stabilizing the property market through city-specific measures to control new construction, reduce inventory, and optimize supply. However, based on the overall tone of meetings this year, real estate will be treated more as part of broader market development rather than receiving targeted policy support.
Additionally, China's November PPI declined again, compounded by continued sharp drops in real estate data and persistent slowdown in infrastructure investment growth, indicating overall weak domestic demand. Following last Friday's market close, the Ministry of Commerce and the General Administration of Customs announced that a licensing system for certain steel products will take effect starting January 1, 2026. The product list covers nearly all steel and steel products under Customs Chapters 72 and 73, though semi-finished steel products are not yet included. The new export licensing regulations for steel products may slow export momentum, though specific implementation details remain unpublished, making it difficult to fully assess the actual impact at this stage. However, the licensing system increases compliance costs for exporting low-value-added products, thereby compelling enterprises to adjust their product portfolios and reduce exports of resource-intensive, low-end goods.
In the short term, traditional off-season demand has significantly pressured steel mills' order intake. Compounded by the recent nationwide cold snap, sharply lower temperatures have further restricted outdoor construction, making high social inventories the core challenge. Last Friday, apparent demand for major steel products fell to 8.3972 million tons—the lowest level for this period in recent years—representing a 2.83% week-on-week decline. Specifically: - Rebar apparent demand fell 6.4% - Wire rod apparent demand declined 3.94% - Hot-rolled coil apparent demand dropped 0.92% - Medium/thick plate apparent demand decreased over 4% - Only cold-rolled coil saw a 2.54% increase in apparent demand. Additionally, with few new projects commencing this year and demand expected to continue shrinking next year, subsequent winter stockpiling volumes may remain at relatively low levels. The likelihood of winter stockpiling turning from decline to increase in the future is also limited. On the supply side, the average daily pig iron output of 247 steel mills last week fell below 2.3 million tons for the first time since March this year. Meanwhile, heavy pollution alerts have recently been activated in multiple regions, potentially impacting steel supply. Starting December 14, Hebei and multiple provinces activated severe pollution alerts. Xianyang initiated Level II emergency response measures on December 17, while Xi'an and Tianjin launched Level II responses on the same date. Short-term environmental production restrictions may alter market supply expectations. Furthermore, the National Development and Reform Work Conference emphasized comprehensive measures to address “internal competition” and foster new growth drivers, drawing attention to potential “anti-internal competition” policy expectations.
Overall, rebar has begun rebounding supported by multiple factors including cost underpinnings, anti-involution policies, and production curtailments due to severe pollution alerts. However, within the broader context, rebar remains in a low-range oscillation pattern.
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