I. Billet Supply and Circulation in December 2025

1. Nationwide billet inventory at sampled distribution enterprises declined in December, totaling approximately 2.4 million tons—a month-on-month decrease of 7.72% and a year-on-year drop of 6.75%. North China accounted for roughly 49% of this volume, while Northeast China represented 21%.

Although North China maintained the highest share of billet supply in December, its volume decreased significantly. This was primarily due to year-end blast furnace maintenance at steel mills and the reopening of strip mill lines at some mills, reducing molten iron diversion to billet production. Most resources in Northeast China were destined for export orders, with delivery dates concentrated in January and February. Recently, China's billet export quotations have been relatively high, making transactions difficult to close. Additionally, profits have narrowed significantly compared to earlier periods. Therefore, steel mills have primarily focused on domestic orders, with export order volumes showing a downward trend compared to the previous month. Only a few mills have small quantities of earlier orders remaining.

2. In December, North China accounted for 65% of domestic billet inflows, while East China represented approximately 24%. Mid-December saw Tangshan implement environmental production restrictions for about one week, reducing billet demand. Post-restriction, production resumption was lackluster, with cautious billet procurement.

II. January 2026 Billet Supply Forecast

1. Barring major policy shocks, the January billet market may exhibit a pattern of “simultaneous contraction in supply and demand, with demand contraction potentially slightly exceeding supply.” January is a traditional off-season for construction and manufacturing, particularly in northern regions where outdoor construction largely halts. Operating rates and procurement willingness among major downstream billet-rolling enterprises will notably decline, directly suppressing billet demand.

2. Effective January 1, 2026, export license management will be implemented for approximately 300 customs codes of steel products, including steel billets. This measure aims to guide the industry's transition from exporting low-value-added, high-energy-consuming products toward high-end and green manufacturing. This policy may impact low-value-added steel billets, potentially reducing billet supply.

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