Looking at the resumption of construction sites and the implementation of policies from the short-term trend of the steel market

Before this year's Spring Festival, the domestic construction steel market showed a weak supply-demand pattern. Due to concerns about demand after the Spring Festival, spot prices of construction steel fell weakly. During the Spring Festival, the construction steel markets in various regions exhibit different operational characteristics. Considering that the Spring Festival is late this year and the market will enter the traditional peak demand season in March after the Yuanxiao (Filled round balls made of glutinous rice-flour for Lantern Festival), demand performance will become the core determinant of future steel price trends.
Overall, during the Spring Festival, the construction steel markets across the country are generally closed, and the prices of construction steel are basically the same as before the Spring Festival. The author expects that the supply side will gradually rebound in the future, and steel production will remain low in the short term. In terms of inventory, during the Spring Festival period, the arrival of goods in the terminal market is relatively concentrated, and the social inventory of steel in most regions has increased, but the growth rate is not uniform; The inventory of steel mills has generally increased, especially in some steel companies in East China and North China, where inventory growth has been significant. However, the overall inventory pressure is lower than the same period in previous years. In terms of sentiment, all parties generally hold a cautious and optimistic attitude. Due to cost support, low inventory, and expectations of future peak seasons supporting steel prices, steel traders are not lacking in bullish sentiment. However, considering that demand has not yet substantially started, coupled with inventory growth in some regions, market wait-and-see sentiment still exists.
The author believes that in the short term, the market trend mainly depends on the pace of downstream construction site resumption, the intensity of demand release, and the progress of steel enterprises resuming production.
From the perspective of the six major regions, after the Spring Festival holiday, the market performance varies in different regions. After the Spring Festival in East China, the prices of construction steel fluctuated strongly, while Shanghai, Hangzhou, and Ningbo in Zhejiang remained stable during the market closure period, and steel inventories increased to varying degrees; Affected by cost support, Fujian, Shandong and other places have strong bullish sentiment; The increase in steel inventory in Jiangsu region is limited, and the market sentiment is positive. After the Spring Festival, the price of construction steel has slightly increased. The spot prices of construction steel in southern China remain stable, and most businesses in Guangdong and Guangxi start production after the eighth day of the first lunar month. Although steel inventories have increased, some areas are lower than the same period last year; Due to low steel inventory, there is a high probability of strong construction steel prices in Hainan and Shenzhen, Guangdong. The price of construction steel in southwest China was basically stable. After the Spring Festival, the shock was relatively strong. The stock of steel in Chengdu, Chongqing, Kunming, Yunnan and other places in Sichuan increased slightly during the market closing period. Most electric furnace steel enterprises plan to resume production at the end of February, and downstream construction sites are concentrated in resuming construction after the Yuanxiao (Filled round balls made of glutinous rice-flour for Lantern Festival). The construction steel market in Central China is mainly closed, with narrow fluctuations in construction steel prices after the Spring Festival. The capacity utilization rate of steel enterprises in Wuhan, Hubei, Changsha, Hunan, Zhengzhou, Henan and other places remains low, and steel mill inventories have increased, resulting in a lag in demand initiation. During the Spring Festival in North China, the price of construction steel remained stable, and this characteristic continued after the Spring Festival. Steel inventories in Beijing, Tianjin, Shijiazhuang, Hebei, and other places increased, but the overall pressure was controllable; Due to the concentrated arrival of goods, the price of construction steel in Tangshan, Hebei has been under pressure after the Spring Festival. In terms of the northwest region, merchants in Taiyuan, Shanxi, Xi'an, Shaanxi, Lanzhou, Gansu and other places have a strong bullish sentiment; Urumqi steel companies in Xinjiang have a strong willingness to raise prices, and after the Spring Festival, the prices of construction steel have mainly increased slightly; Due to the special climate, the demand in Qinghai and Xizang lags behind. The prices of construction steel in Northeast China have remained stable, while cities such as Harbin in Heilongjiang, Dalian in Liaoning, and Changchun in Jilin have basically shown a state of "price but no market". Steel inventories have slightly increased, and steel production by steel enterprises has remained stable. Steel traders have limited inventory, making it difficult for prices to fluctuate significantly.
Overall, during the Spring Festival period, domestic construction steel prices remained stable, with different regions showing some differentiation in performance. Merchants generally hold a cautious and optimistic attitude towards the future market. The low supply side, low inventory pressure, and expected demand support during peak seasons have all provided impetus for future increases in construction steel prices. However, in some regions, the inventory growth of steel mills is significant, coupled with the constraints of slow demand recovery, and there is still resistance to a significant increase in construction steel prices.
The author predicts that in the short term, the price of construction steel will rise briefly under the support of low inventory and cost, and then enter the shock adjustment stage with a high probability. If the market wants to continue rising, it still depends on the resumption of downstream construction sites and the implementation of macro policies after the Yuanxiao (Filled round balls made of glutinous rice-flour for Lantern Festival) Festival. It is suggested that all parties should be cautious.