Market Overview

Mixed price movements emerged this week as northern markets declined while most regions held steady. Selected northern mills trimmed offers by 30-50 RMB/ton amid softening billet costs. Production dipped 0.76k tons weekly, though demand remained tepid. With output cuts failing to meet expectations and consumption staying subdued, some markets resorted to hidden price reductions. The confluence of weak raw materials and stagnant demand points to stable-to-soft pricing in the coming week.

Key Market Dynamics

1. Price & Cost Adjustments

• National Average: 4,359 RMB/ton (↑7 RMB/t WoW), masking regional divergence

• Raw Material Easing: Shandong billets: ↓50 RMB/t WoW; Jiangsu billets: ↓20 RMB/t WoW

• Mill Pricing Strategies: Northern mills: Selective cuts (30-50 RMB/t); Majority: Held offers stable amid cost uncertainty

2. Profit Divergence Intensifies

• Shandong: -20 RMB/t (↑40 RMB/t WoW) – partial recovery from deep losses

• Jiangsu: 210 RMB/t (↑10 RMB/t WoW) – sustained regional advantage

• Structural Issue: Cost disparities drive widening regional profit gaps

3. Inventory Rebalancing

• Social Stocks: 689.8k tons (↓6.6k tons WoW) – traders destock cautiously

• Mill Stocks: 697.2k tons (↑18k tons WoW) – inventory shifting to producers

• Pressure Point: Mill inventories up 14.8k tons MoM despite output cuts

4. Supply Moderation

• Output: 358k tons (↓7.6k tons WoW) – minor correction

• Operational Rates: Capacity utilization: 77.79% (↓1.65% WoW);Operating rate: 59.09% (↓0.91% WoW)

• Underwhelming Cutbacks: Production remains 26.6k tons above 2024 levels

Regional Spotlight: East China

• Billet costs dipped 10-30 RMB/t, but mills raised offers marginally

• Social inventories rose on environmental production curbs anticipation

• Terminal demand muted – transactions dominated by essential purchases

• Outlook: Modest upward pressure despite broader softness

Next Week Outlook

• Price Trajectory: Stable with soft bias (4,340–4,360 RMB/t range)

• Support Factors: Cost Floor: Billet prices nearing bottoming zone; Inventory Control: Traders maintaining lean stocks

• Downside Risks: Northern mill price cuts may spread southward;Demand fails to respond to traditional seasonal triggers

• Key Watchpoint: Jiangsu profit resilience vs Shandong distress