SunSirs: Hot Rolled Steel Sheet Supply Exceeded Demand, Leading to Inventory Accumulation (January 19-23)

Price trend

Last week, hot rolled sheet and coil prices experienced a slight decline. According to the business data analysis system of SunSirs, as of January 23rd, the average price of domestic hot rolled sheet and coil was 3,313 RMB/ton, a week-on-week decrease of 0.09%; the average price of domestic cold-rolled coil was 3,837 RMB/ton, a week-on-week decrease of 0.775%.

Factors influencing price changes:

Fundamentals

According to the latest data obtained by SunSirs, last week's hot-rolled steel social inventory was 2.8114 million tons, a week-on-week decrease of 46,600 tons, and weekly production was 3.0541 million tons, a week-on-week decrease of 29,500 tons; last week's cold-rolled steel social inventory was 1.2132 million tons, a week-on-week decrease of 23,200 tons, and weekly production was 876,000 tons, a week-on-week decrease of 12,400 tons.

Last week, the inventory of steel billets at major warehouses and ports in Tangshan totaled 1.6708 million tons, an increase of 58,000 tons compared to the previous week.

Supply Side:

Last week, the supply of the five major steel product categories totaled 8.1959 million tons, remaining unchanged week-on-week. The production structure of steel products showed some differentiation this period, mainly characterized by increased production of construction materials and decreased production of steel plates and coils. Last week, the total inventory of the five major steel product categories was 12.5708 million tons, a week-on-week increase of 100,700 tons, or 0.8%. Last week, the total inventory of the five major product categories rebounded, and the inventory changes of construction materials and steel plates showed differentiation, with construction materials showing an increase in inventory and steel plates showing a decrease. Construction materials inventory increased by 148,700 tons, while steel plate inventory decreased by 48,000 tons. In terms of consumption, the weekly consumption of the five major product categories last week was 8.0952 million tons, with construction materials consumption decreasing by 0.8% week-on-week and steel plate consumption decreasing by 2.6% week-on-week. The consumption structure of construction materials and steel plates remained consistent among the five major product categories last week.

Cost side

From January to December 2025, the cumulative export volume of steel billets reached 14.82 million tons, a year-on-year increase of 134% and a month-on-month increase of 11%. In December alone, steel billet exports reached 1.44 million tons, a year-on-year increase of 86% but a month-on-month decrease of 2%. Due to seasonal slowdown in overseas demand, weakening price advantages, and a decline after an earlier surge, steel billet exports weakened marginally in December. However, compared to the 17% month-on-month decrease in the previous year, steel billet exports in December 2025 still showed resilience. According to the National Bureau of Statistics, in 2025, my country's crude steel, pig iron, and steel product output were 960.81 million tons, 836.04 million tons, and 1,446.12 million tons, respectively, representing year-on-year decreases of 4.4%, 3%, and an increase of 3.1%. According to the National Bureau of Statistics' revised data, the crude steel output in 2024 was 1,005.09 million tons. Crude steel output in 2025 decreased by 44.28 million tons compared to 2024. In December 2025, the year-on-year growth rate of value added of industrial enterprises above designated size nationwide accelerated by 0.4 percentage points compared to November, indicating a recovery in growth momentum. The main driving factor was the improvement in manufacturing production: the value added of the manufacturing sector increased by 5.7% year-on-year in December, an increase of 1.1 percentage points compared to the previous month.

Market Outlook

As the off-season deepening, there is limited room for further improvement in the apparent demand for rebar and hot rolled coil. With demand expected to weaken seasonally before the Lunar New Year, steel inventory pressure may further accumulate. As of January 23, the seasonal trend in the ferrous metals market was quite pronounced, and finished steel prices lacked significant drivers, fluctuating in line with raw material prices. The fundamentals of hot rolled sheet and coil were relatively stable; unexpected maintenance at steel mills in North China had led to a contraction in hot rolled coil sheet and supply, while the rate of demand decline was slower than in the same period of previous years.  The rate of inventory reduction had reached a new high for the same period in the past 10 years. Attention should be paid to the pace of steel mill restarts and the support provided by raw material replenishment to ferrous metal prices.

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