Tianjin Alcoa International Trade Co., Ltd. , https://www.tjalcoa.com
Steel market enters "destocking" stage
The domestic steel market has entered a "de-stocking" phase, marking a significant shift in the industry's dynamics. Since the fourth quarter of last year, the market has faced considerable pressure, with rising social inventories and declining demand, especially around the Spring Festival. As construction activity slowed, inventory levels surged, creating a heavy burden on the market. The peak of this inventory pressure occurred in early March, but recent price increases in Beijing’s rebar market and Tianjin’s hot-rolled coil market signal subtle changes in supply and demand.
Although some steel prices have remained stable, trading volumes have started to grow, indicating that the market is gradually adjusting. As market operations stabilize, the wait-and-see attitude among participants is expected to diminish, which could lead to increased transaction activity. This transition suggests that the domestic steel market is now moving into a de-stocking cycle, a phase that will test the resilience of the industry.
Currently, total social inventory of steel products stands at approximately 20 million tons, a level that reflects the daily crude steel output of around 2 million tons. Construction steel, in particular, has seen significant stockpiles, with Guangzhou holding the highest inventory due to seasonal concentration and price differences between northern and southern markets. For example, the price gap between Beijing and Guangzhou for rebar once reached as high as 400 yuan per ton, leading to a large flow of resources southward and contributing to the sharp rise in Guangzhou’s inventory.
In Beijing, the social inventory of construction steel has reached 100,000 tons, creating substantial pressure. Shanghai, located between the north and the south, maintains a more stable inventory level of around 600,000 tons, while Tianjin and Shenyang also face high stock levels—over 500,000 and 600,000 tons respectively. These figures highlight the overall challenge of managing excess inventory across different regions.
Sheet metal inventories, including hot-rolled and cold-rolled coils, are also under pressure, though slightly less than construction steel. Total sheet metal inventory exceeds 6 million tons, influenced by product usage patterns and seasonal fluctuations. Export activities have helped alleviate some of the domestic pressure, but the overall situation remains challenging.
Looking ahead, the de-stocking process will continue to face downward pressure. Despite low prices, regional and product price differences persist, causing ongoing volatility. Market participants remain cautious, and the outlook for stability remains uncertain. In Beijing and Shanghai, construction steel prices are testing the 3,100 yuan/ton threshold, while Guangzhou’s prices have fallen below 3,400 yuan/ton, offering some relative attractiveness.
Price disparities between hot-rolled coils and rebar in Tianjin and Guangzhou add to the complexity, creating additional challenges for market stability. However, as the market moves through these adjustments, increased trading activity may help support a more active and stable environment.
With the peak of social inventory pressure in March, the market is now beginning to move toward de-stocking. Although upstream raw material prices have dropped, reducing crude steel production remains difficult. However, as the off-season period wanes, the market is expected to gradually stabilize, paving the way for a more sustainable and efficient operation.