Steel supply pressure gradually rising, steel price trend analysis

On the 7th, steel prices showed an overall increase at different rates, with the futures market outperforming the spot market. Specific price increases for each variety are shown in the chart.

Due to multiple factors, including positive news, the shift in macroeconomic sentiment (such as the 2026 Central Bank Work Conference) and capital-driven forces, the futures prices for coking coal and coke reached their price limits. This, in turn, pushed the steel futures market higher. Baowu Steel’s latest pricing policy, with flat prices for February and a 100 yuan/ton increase for March, has positively guided market expectations.

On the supply side, the latest data from the China Iron and Steel Association (CISA) shows a significant increase in steel production. More steel will be arriving in the spot market in the future.

On the demand side, the futures market has boosted terminal demand, though procurement sentiment and orders remain cautious. The sustainability of this demand is still to be observed. Traders in the market remain cautious, focusing on actively reducing inventory to promote transactions, while price adjustments tend to be more conservative.

The strong rally in coke futures has strengthened market expectations, although the actual spot market has already implemented the fourth round of price reductions. Iron ore prices remain firm, while scrap steel prices are fluctuating within a narrow range.

In this context, the rise in finished steel prices is restoring steel mills’ profit margins, which may encourage increased production. In the short term, steel prices are expected to fluctuate within a certain range, with limited space for large movements.

Attention should be paid to macroeconomic and capital-driven factors that may influence the pre-holiday restocking pace and steel mills’ production status.

The external environment facing the industry is complex, with both opportunities and challenges. Overall, there are structural opportunities, but also dual pressures of increasing supply and demand differentiation. Demand is shifting from “general growth” to “structural growth.” The country’s high-quality development rules are reshaping the industry. Companies will accelerate their differentiation based on their own conditions.

Supply Side:

The latest statistics from CISA show that in the second half of December 2025, key steel enterprises produced 18.07 million tons of crude steel. The average daily output was 1.643 million tons, down 11.0% from the previous period.

They produced 18.37 million tons of pig iron, with an average daily output of 1.670 million tons, down 0.6%. Steel products production was 20.81 million tons, with an average daily output of 1.892 million tons, up 4.9% from the previous period.

Based on this data, it is estimated that the national daily output of crude steel during this period is 2.02 million tons, down 11.0%. The daily pig iron output is 2.01 million tons, down 0.6%, while steel product output is 3.92 million tons, up 2.0%.

The significant increase in steel output for this period is influenced by some enterprises’ concentrated inventory settlement at the end of the month. Excluding this factor, the steel output growth would be 4.0%.

In the second half of December 2025, key steel enterprises had a steel inventory of 14.14 million tons. This is a decrease of 1.87 million tons, or 11.7%, compared to the previous period. The inventory increased by 1.77 million tons, or 14.3%, compared to the beginning of the year.

Compared to the same period last month, the inventory decreased by 140,000 tons, or 1.0%. Compared to the same period last year, the inventory increased by 1.77 million tons, or 14.3%. Compared to two years ago, it increased by 1.78 million tons, or 14.4%.

Due to the impact of raw material prices, the shipment prices for stainless steel water tanks have experienced a temporary increase.

As a manufacturer of customized water tanks, maintaining a reasonable inventory of raw materials is a powerful strategy to manage price fluctuations. If you have any custom water tank needs, please feel free to contact us.