Data from the past five years show that the current daily average molten iron output of steel mills is at a median level over the past five years. Since the beginning of the year, the daily average molten iron output of steel mills has been higher than the level in the same period last year. Starting from the past two years, steel mills have been continuously adjusting their flexible production policies according to profits and demand, including voluntary production cuts and inventory reduction. The recent increase in molten iron output is not only affected by the obvious year-on-year increase in the profit rate of steel mills, but also indicates that the overall demand in the steel market has been slowly released recently. With the increase in profits and the recovery of demand, the blast furnace enterprises that carried out maintenance in the early stage have gradually resumed production. However, it should be noted that although downstream demand is still continuing to recover, with the gradual implementation of international tariff policies, part of the external demand pressure may be transferred into internal demand pressure. Coupled with the continuous increase in the output of steel mills, the supply-demand relationship will also keep changing. Steel mills still need to flexibly adjust their production policies according to the actual situation to maintain the balance of the supply-demand relationship.

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Due to the relatively loose supply side of raw fuels in the past two years, in 2024, when the apparent consumption of steel was lower than the previously predicted value, steel mills responded to market changes by reducing production and optimizing production plans, reducing the demand for raw materials, and the profit margins of coking enterprises have been continuously squeezed. With the implementation of the tenth round of price reduction for coke on February 25, the inventory reduction cycle of coking enterprises has started, and signals of a price bottom may appear in the near future. And recently, with the increase in molten iron output, the price of iron ore still has support in the short term, and the average profit rate of steel enterprises in the near future may tend to be stable.

Looking at the inventory data in recent years, basically, the peak of the total inventory of the five major steel products will appear in the first quarter. Since the beginning of this year, the combined inventory of the five major varieties has been at a relatively low level over the past five years. The main reason is that since September last year, the profits of steel enterprises have fluctuated frequently. In order to cope with market fluctuations and profit pressure, some steel mills have successively and voluntarily launched maintenance plans according to their own situations, and the output has thus decreased to a certain extent. In the case of obvious insufficient market expectations and a slow inventory reduction cycle, in order to maintain the normal circulation of enterprise funds, the market has started to reduce its regular inventory. Although the combined inventory of the five major varieties this week is at a relatively high level this year, it has dropped significantly compared with the same period last year, and the inventory pressure is not prominent.

In terms of consumption performance, the consumption of building materials has increased significantly, and the consumption of most varieties has shown a slight recovery recently. According to the research of Centennial Building Materials, the fund availability rate has improved compared with the same period in recent days, and there have been positive changes in many provinces. On the one hand, the allocation of special funds is more reasonable, especially the preference for new projects; on the other hand, the construction units of central and state-owned enterprises have optimized the management of their existing projects to ensure the smooth flow of funds for key projects. With the successive resumption of projects in many places, the demand side may continue to recover, but the pressure on the export side still needs to be paid attention to.