[SMM Hot Topic] SMM Forecasts 20%-25% Increase in Total Hot-Rolled Coil Inventory Accumulation in First Week After 2026 Chinese New Year

• As of the third week before the Chinese New Year, the pace of domestic hot-rolled coil inventory buildup remained relatively normal.

According to SMM data, the average hot-rolled coil production in January 2026 was 3.18 million mt, down about 5% YoY, while the average apparent consumption was around 3.18 million mt, down about 4% YoY.

Inventory side, based on data from the third week before the Chinese New Year, the inventory buildup pace in 2026 was 2% slower than the average of the past four years during the same period. From the seventh week to the third week before the holiday, this year’s buildup pace was slightly higher than the four-year average, indicating an overall normal inventory buildup pace for hot-rolled coil before the Chinese New Year.

• During the 2026 Chinese New Year period, the total inventory buildup is expected to reach around 20%-25%.

Post-Chinese New Year, on the production side, according to SMM data, the average hot-rolled coil production in January 2026 was approximately 3.18 million mt. Affected by steel mill maintenance, the increase in hot-rolled coil production in February 2026 is expected to be relatively limited, with the average likely reaching around 3.19-3.23 million mt, down about 6% YoY compared to February 2025.

On the inventory side, from 2022 to 2025, the total inventory buildup in the first week after the Chinese New Year ranged from 20% to 40% WoW compared to the last week before the holiday. It is projected that in the first week after the 2026 Chinese New Year, the total inventory will increase by approximately 20%-25% WoW compared to the last week before the holiday, which may be relatively close to last year's buildup level. However, as the current inventory level is already 19% higher YoY, the market is expected to continue facing significant pressure after the Chinese New Year.