Price trend

Last week, hot rolled sheet and coil prices experienced a slight decline. According to SunSirs’ commodity price analysis system, as of February 6th, the average price of domestic hot rolled sheet and coil was 3,313 RMB/ton, a week-on-week decrease of 0.3%; the average price of domestic cold rolled sheet was 3,807 RMB/ton, a week-on-week decrease of 0.781%.

Factors influencing price changes:

According to the latest data from SunSirs, last week's hot rolled steel social inventory was 280.45 tons, a week-on-week increase of 21,200 tons, and weekly production was 3.0916 million tons, a week-on-week decrease of 500 tons; last week's cold rolled steel social inventory was 1.1971 million tons, a week-on-week decrease of 14,400 tons, and weekly production was 884,200 tons, a week-on-week increase of 100 tons.

Last week, the inventory of steel billets at major warehouses and ports in Tangshan totaled 1.689 million tons, a decrease of 20,000 tons compared to the previous week. As of February 1st, the volume of outstanding steel billet orders held by the surveyed steel mills was 1.384 million tons, an increase of 310,000 tons compared to the survey conducted on December 31st, representing a 28.9% increase. Of this total, domestic orders accounted for 410,000 tons, a decrease of 198,000 tons, while direct export orders amounted to 974,000 tons, an increase of 508,000 tons.

In terms of supply, the supply of the five major steel products last week was 8.199 million tons, a decrease of 32,700 tons week-on-week, a decrease of 0.4%. Last week, the production of the five major steel products, except for cold rolled steel and mild steel plates, decreased week-on-week. The main driving factor was routine maintenance of some production lines as the Chinese New Year approached. In terms of inventory, the total inventory of the five major steel products last week was 13.3775 million tons, an increase of 592,400 tons week-on-week, an increase of 4.6%. Last week, the total inventory of the five major products increased week-on-week, except for mild steel plates: factory inventory increased week-on-week, with the increase mainly contributed by wire rods. Social inventory also increased week-on-week, with the increase mainly contributed by rebar. In terms of consumption, the weekly consumption of the five major products last week was 7.6066 million tons, a decrease of 5.1%; among them, the consumption of construction materials decreased by 16.6% week-on-week, while the consumption of plate products increased by 0.1% week-on-week. Last week, the apparent consumption of the five major products showed a decrease in construction materials and a slight increase in plate products.

Cost side

Market outlook

On the supply side, the decline in production was mainly due to routine maintenance and insufficient orders received by steel mills. Subsequently, due to concentrated production cuts in short-process steelmaking, and continued order shortfalls, production is expected to decline further. On the demand side, with the increasing number of construction site closures and processing plant holidays, spot market transactions will further shrink starting next week, making the seasonal off-season characteristics more pronounced. In terms of inventory, as the rate of demand decline exceeds the rate of production decline, steel inventory is expected to continue to accumulate. Overall, the coking coal market saw a significant increase due to news of the Indonesian government's proposed substantial production cuts. However, import data shows that 98.6% of China's Indonesian coal imports in 2025 was thermal coal, which had limited impact on coking coal. Furthermore, raw material replenishment is gradually coming to an end, limiting its impact on steel prices. The steel market faces downward pressure in the future, and attention should be paid to the recovery of demand after the holidays.

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