SunSirs: Low Winter Stockpiling Intentions for Steel Due to Weak Post-Holiday Demand Forecasts

As is well known, winter stockpiling has historically been a defining feature of the steel market during the colder months, serving as a strategy for steel traders to capitalize on post-Spring Festival market conditions.

In recent years, driven by prudence, steel traders have shown a further decline in proactive winter stockpiling intentions. They have significantly reduced stockpile volumes or opted out entirely. According to survey data, less than 30% of companies explicitly planned active winter stockpiling this year. Most engaged in passive stockpiling, while over 30% abandoned it altogether. With the late timing of this year's Spring Festival, construction sites typically resume operations after the 15th day of the first lunar month. This extended period of steel demand stagnation has further dampened companies' willingness to stockpile.

In recent years, against a backdrop of declining demand, construction steel prices have generally weakened after the holiday, with winter stockpiling profits failing to materialize year after year. Steel traders' enthusiasm for winter stockpiling has noticeably waned. This year's winter stockpiling season is nearing its end, with few clients actively participating; most merchants have opted to wait and see.

Amid the broader steel industry slump, mills have a pressing need to maintain stable production, reduce inventory, and secure cash flow. Currently, mills across multiple regions—including Northeast, North, Northwest, and Southwest China—have announced winter stockpiling policies. The lock-in period spans late January to late March, with some price caps set between 3,130 and 3,300 yuan per ton. Some mills are implementing winter stockpiling models such as price locking, spot pricing, and deferred settlement. Analysts indicate that even when steel traders participate in winter stockpiling, they often set their psychological price expectations quite low, leading to significant discrepancies between mill and trader expectations. Overall, this year's winter stockpiling activity has been lackluster.

Similar to previous years, this year's steel winter stockpiling primarily involves the following models: First, price-locked settlement. In the Hangzhou market, the price lock range for winter stockpiling this year is CNY3,130–3,170 per ton. After factoring in storage and capital costs, steel traders' winter stockpiling costs range from CNY 3,160 to 3,190 per ton. Second, deferred settlement. Based on current steel mill settlement models, most settlement cycles will conclude by the end of March. Third, normal shipments according to contractual volumes, with corresponding rebates upon meeting sales targets. Fourth, standard shipments without special preferential settlement for winter stockpiling resources. According to incomplete statistics, as of February 3, 13 steel mills had announced their 2026 winter stockpiling policies, including 5 in Northeast China, 3 in North China, 2 in Northwest China, and 3 in Southwest China.

What is the current stockpiling situation among steel traders? Despite low winter stockpiling willingness, social inventory accumulation has now commenced. According to Mysteel data, as of the week ending February 5, total rebar inventory stood at 5.1957 million tons, up 440,400 tons week-on-week but down 1.8581 million tons year-on-year. Of this, social inventory stood at 3.6592 million tons, up 395,200 tons week-on-week; mill inventory was 1.5365 million tons, up 45,200 tons week-on-week. This indicates that the primary increase in rebar inventory accumulation originated from the social sector. The rise in social inventory is largely driven by steel traders' passive winter stockpiling behavior. In other words, as winter construction demand rapidly contracted and the Spring Festival holiday approached, traders' inventories could not be further reduced downstream. Meanwhile, steel mills continued to deliver resources, driving up social inventories. Speculative stockpiling in the market has significantly decreased compared to previous years, with traders favoring a business model of low inventory and fast turnover. The current accumulation of social inventories is primarily due to a supply-demand mismatch.

At present, market participants maintain cautious expectations for future price trends, showing limited willingness for proactive winter stockpiling. Most are engaged in passive winter stockpiling, with regional variations observed. According to SteelHome's survey, traders in Hangzhou demonstrate relatively strong enthusiasm. Steel mills with confirmed winter stockpiling policies have allocated approximately 1.135 million tons for construction materials, exceeding last year's volume. However, most transactions involve deferred settlement models and arbitrage between futures and spot markets, with limited active speculation on price movements. Winter stockpiling intentions are relatively limited in other regions. In Henan, traders show weak enthusiasm, with both the number of clients participating in winter stockpiling and the total stockpiled volume reaching new lows in recent years.

Can steel prices experience a “mini spring rally” after the holiday? March is a crucial “critical phase” for the market. With the late timing of this year's Spring Festival, the tug-of-war between reality and expectations will unfold within a shorter timeframe. Weak demand remains difficult to resolve in the short term, establishing a foundation for bottoming out. In the first half of March, market focus will shift from macroeconomic expectations to post-holiday production resumption. However, constrained by the real estate sector's current state, upward price momentum faces significant pressure. By the latter half of the month, actual construction site reopenings and manufacturing order indices will become clearer, increasing steel price volatility. Currently, March lacks clear directional trends, with the steel market likely to fluctuate within a range. Structural opportunities will outweigh systemic ones.

Rebar supply contracted as expected, yet demand remains subdued. Seasonal weakness persists in fundamentals, compounded by low capital attention, keeping prices under pressure during the off-season. Relatively favorable conditions post-holiday may emerge.

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