The steel market has experienced a prolonged decline since the start of March, with domestic steel prices hitting new annual lows. Market sentiment remains weak, and traders are struggling with both inventory pressures and limited capital. Despite some signs of gradual recovery, the overall market remains sluggish, with merchants forced to cut prices in order to move goods. This passive sales strategy has become a common response in the face of low demand.
Meanwhile, long-term capital markets such as futures and electronic trading have continued to fall sharply, leading to a shift in trader attitudes. More participants are now adopting a bearish outlook, further eroding market confidence. End-users, too, have become more cautious due to the persistent downward trend in spot prices, resulting in reduced purchasing activity and a lack of transaction momentum.
As of March 7, the price of 8mm HRB400 plate in Shanghai was 3,190 yuan/ton, down 70 yuan/ton from the previous weekend. The price of 6.5mm HRB300 high-line stood at 3,170 yuan/ton, a decrease of 10 yuan/ton. The 20mm HRB400 rebar was priced at 3,110 yuan/ton, down 50 yuan/ton. Hot-rolled coil (5.5*1500 HRC) remained stable at 3,400 yuan/ton, while 1.0*1250 galvanized sheet fell by 30 yuan/ton to 4,190 yuan/ton.
Since the Spring Festival, steel prices have been on a steady downward trend, driven by several key factors. First, uncertain policy environments and weak demand have led to low trading volumes, making it difficult for prices to stabilize. Second, an oversupply of steel in the short term, combined with high inventory levels among traders, has intensified supply-demand imbalances and put additional pressure on the market. Third, the four-month price slump has fueled trader pessimism, leading to panic selling. Finally, credit issues within the national steel trade sector have worsened, straining the financial health of many companies and causing a severe disruption in the steel trade capital chain.
Looking ahead, the steel market is expected to see some improvement in the coming week. With the end of the winter season and warmer weather, demand from end-users is gradually increasing. Major policy announcements have also been made, allowing downstream industries to plan their production and operations for the year. As a result, purchasing activity is slowly picking up, and shipments have improved compared to the previous period. This has led to a slight rebound in certain regions, signaling a warming market.
Moreover, recent data shows that total market inventory dropped to 20.57 million tons last week, ending a ten-week streak of rising inventories. This marks the beginning of a destocking phase, which should help ease market pressure.
On the policy front, the government’s 2014 work report set a GDP growth target of 7.5%, indicating a commitment to avoiding sharp economic declines. A new fiscal deficit of 1.35 trillion yuan is expected to stimulate domestic consumption, while investments in social housing and urbanization will boost steel demand. Additionally, the elimination of 27 million tons of outdated steel capacity and efforts to reduce pollution will help control overcapacity and ease market pressure.
Overall, despite the ongoing challenges, there are positive signs emerging. Market demand is showing a slight upward trend, and steel prices are expected to stabilize in the short term, supported by rising raw material costs, including billets. While the road to recovery may be slow, the combination of improving demand and supportive policies offers hope for a more stable market outlook.
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