Steel traders predict that steel prices will consolidate in February.

Our reporter, Bao Siwen

After the Spring Festival, my country's steel market has been operating smoothly, and steel traders are generally cautiously optimistic about the steel market outlook for February. On February 7, Li Zhongshuang, general manager of Shanghai Ruikun Metal Materials Co., Ltd., and Liang Taigeng, general manager of Shanghai Hualei Enterprise Development Co., Ltd., told China Metallurgical News that they expect cold-rolled and hot-rolled coil prices to consolidate and rise after the Spring Festival, and that overall steel prices will experience an upward trend, followed by adjustments and range-bound fluctuations.

Steel prices fluctuated downward in January

Looking back on January, my country's steel market experienced volatile fluctuations due to a series of factors, including gradually weakening demand, the start of winter storage, a rebound in steel inventory, and weakening cost support. In terms of price, the price of 1.0mm cold-rolled ST12 produced by Anshan Iron and Steel in Shanghai market dropped from 4,300 yuan/ton on January 2 to 4,250 yuan/ton on January 27, a drop of 50 yuan/ton; the price of 5.5mm hot-rolled Q235 produced by Anshan Iron and Steel rose from 3,430 yuan/ton on January 2 to 3,440 yuan/ton on January 27, a slight increase of 10 yuan/ton; the price of 20mm ordinary Q235 produced by Anshan Iron and Steel and Nanshan Iron and Steel rose from 3,530 yuan/ton on January 2 to 3,530 yuan/ton on January 2. The price of 20mm diameter Grade III rebar HRB400 produced by Maanshan Iron and Steel Co., Ltd. fell from 3,380 yuan/ton on January 2nd to 3,360 yuan/ton on January 27th, a drop of 20 yuan/ton. The price of 8mm to 12mm diameter HRB400 coiled steel produced by Jiangsu Yonggang Steel Co., Ltd. fell from 3,610 yuan/ton on January 2nd to 3,590 yuan/ton on January 27th, a drop of 20 yuan/ton. Overall, in January of this year, prices of mainstream steel products in my country fluctuated downward, with declines ranging from 20 to 50 yuan/ton.

Li Zhongshuang explained that in the last week before the Spring Festival, the prices of cold-rolled and hot-rolled coil in the Shanghai market rose by 20 yuan/ton, reflecting weak downstream demand. Judging from the trading situation, steel traders generally feel that downstream end-user purchasing demand has decreased before the Spring Festival. Many businesses have closed their markets, and market transactions have largely stagnated, leaving the steel market in a state of "high prices but no demand." After January 20th, downstream steel-using enterprises began to take holidays one after another, and steel purchasing demand has gradually weakened, even stagnating in some areas, resulting in a sluggish market. As a result, some businesses have chosen to accept customer negotiations to ensure shipments, and the "apparent decline, but hidden reduction" pattern of steel prices has become increasingly apparent.

Post-Spring Festival Market Expected to Perform Better Than Before the Spring Festival

Steel traders believe that after the Spring Festival, my country's steel market will improve compared to before the Spring Festival, and steel prices are expected to consolidate and rise compared to January. The main reasons are as follows:

First, a surge in production will begin across the country, and "steel demand" is expected to increase. Steel traders explain that in mid-to-late January, local governments will begin holding the "Two Sessions" (National People's Congress and Chinese People's Political Consultative Conference). To date, over 20 provinces, including Beijing, Shanghai, and Jiangsu, have held their two sessions and announced their economic growth targets for 2025. Many regions have set their economic growth targets for this year at around 5% or 5.5%, with Hainan, Inner Mongolia, Hubei, and Chongqing aiming for around 6% or above, demonstrating their confidence in economic development.

At the same time, major projects are being launched across the country, ushering in a surge in downstream construction. For example, Chongqing recently held a groundbreaking and commissioning ceremony for major projects in the first quarter of 2025, with 304 projects launched with a total investment of 386 billion yuan. Anhui Province held a mobilization meeting for the first batch of 622 major projects in 2025, with a total investment of 405.75 billion yuan. Yangpu District in Shanghai held a signing ceremony for major projects in 2025, a major project promotion meeting, and a groundbreaking ceremony for major projects, continuing to schedule 100 major projects. Xiamen City in Fujian Province organized a concentrated groundbreaking ceremony for major projects in the new year of 2025, launching 77 major projects with a total investment of 77.5 billion yuan. Beijing held a concentrated groundbreaking ceremony for major projects in the first quarter of 2025, launching 160 major projects with a total investment of over 340 billion yuan. While project construction is in full swing, funding is also accumulating. According to industry statistics, as of early January, 14 provinces had disclosed their local government bond issuance plans for the first quarter of 2025, totaling 654 billion yuan. Steel traders believe that after the Spring Festival, major construction projects will surge across the country, injecting strong momentum into steel demand.

Secondly, the "Two New" policies will be expanded, and consumption of high-quality steel is expected to increase. The central government recently allocated 81 billion yuan in the first round of funds for the 2025 consumer goods trade-in program to support local governments in ensuring the continued implementation of the "Two New" policies (large-scale equipment upgrades and consumer goods trade-in programs). The State Council Information Office recently held a regular policy briefing to discuss the expanded implementation of the "Two New" policies. The overall considerations for expanding the implementation of the "Two New" policies in 2025 are to increase funding, broaden the scope of support, optimize implementation mechanisms, maximize leverage effects, and boost domestic demand. Specifically, in terms of expanding support for trade-ins for consumer goods, eligible fuel vehicles meeting the National IV emission standards will be included in the scrapping and replacement subsidy program, and the maximum subsidy limit for vehicle replacement and replacement will be standardized nationwide. The number of home appliance categories eligible for trade-in subsidies will be increased from eight in 2024 to 12 in 2025, with a maximum subsidy of 20% of the sales price per appliance. Taking into account the actual needs of households, the maximum subsidy per consumer for air conditioners will be increased from one to three. In particular, subsidies for new mobile phones and other digital products will be implemented to meet public expectations. Strong support will continue for the replacement of household appliances and electric bicycles.

Steel traders predict that with the accelerated implementation of the "two new" policies, steel demand is expected to further increase. Industry analysts predict that my country's automobile production is expected to reach approximately 32.9 million units in 2025, a year-on-year increase of 4.8%. Driven by the "two new" policies and taking into account the national encouragement of the development of new energy vehicles, the automotive industry's steel demand is expected to reach 59.8 million tons in 2025, a year-on-year increase of 4%. Overall, the "two new" policies will drive an average annual increase of 12 million tons in steel consumption, primarily driven by stainless steel plate, non-oriented silicon steel, cold-rolled plate, galvanized plate, seamless steel pipe, and high-quality steel bar and wire rod.

Finally, short-term market supply pressure is minimal, accumulating upward momentum for the market. During the Spring Festival holiday, many steel companies halted production for maintenance, resulting in a decrease in steel production. Data shows that in January, the average blast furnace operating rate of 100 small and medium-sized steel companies nationwide was 75.3%, a decrease of 0.2 percentage points from the previous month. Statistics show that since the beginning of January this year, over 21 domestic steel companies have announced maintenance notices. Some steel mills plan to overhaul their 5,500-cubic-meter blast furnaces for approximately nine days in February, impacting approximately 96,000 tons of molten iron production. Others plan to overhaul their entire steel pipe production line from January 20 to February 15, impacting an estimated 70,000 tons of production. Others plan to conduct a combined 75-day overhaul of their blast furnaces and related production lines in February, impacting approximately 160,000 tons of construction steel production per month.

Recently, steel production has decreased, leading to a decline in the amount of steel released to the market and low steel inventories. Steel traders believe that once demand accelerates in the future, steel prices are expected to consolidate and rise.