This week, the ferrous metals sector showed a clear downward trend, with rebar and coking coal and coke hitting new lows in recent months. Macro factors carried significant weight this week, leading to increased market volatility. At the beginning of the week, the Politburo meeting's statements fell short of expectations, with no anticipated real estate-related policies introduced, dampening market sentiment and causing a sharp correction in futures. Mid-week, rumors surfaced that China International Capital Corporation Limited (CICC) might be involved in supporting Vanke, which improved market sentiment and triggered a rapid rally in futures, though a slight correction occurred later in the session. The sustainability and substantive impact of real estate-related news remained limited. In the latter part of the week, signals released by the US Fed and domestic economic meetings did not exceed expectations, coupled with market rumors that steel export licensing regulations would be announced today, effective from January 1 next year, sparking concerns about export demand and leading to an expanded decline in futures.

During the survey period from December 2 to December 8, both the operating rate and capacity utilization rate of rebar rolling lines at steel mills in the Central China region declined; similarly, the operating rate and capacity utilization rate of wire rod rolling lines also decreased.

This week, ferrous metals continued to rise initially before stabilizing, with most of the most-traded contracts completing the contract rollover. At the beginning of the week, the Central Ecological and Environmental Protection Inspection Team disclosed environmental issues in Tianjin and Hebei, with Tangshan in Hebei being singled out for unauthorized steel projects and additional capacity. Meanwhile, as December began, the two major domestic macro conferences were about to be held, strengthening market expectations and driving ferrous metals higher. In the latter part of the week, the SMM daily average hot metal output continued to decline, and raw material support weakened somewhat.

As winter approaches, construction at downstream sites is nearing the end of 2025, and market demand is weakening. To stabilize production pace, digest inventories in advance, ease financial pressure, and lock in market demand, steel mills have recently rolled out their winter stockpiling policies. According to incomplete statistics from SMM, as of December 5, one mill in Northeast China, two in Northwest China, and one in North China have announced their winter stockpiling policies.

This week, ferrous metals mostly showed an initial rise followed by stabilization, while coking coal and coke remained relatively weak. At the beginning of the week, a phone call between the Chinese and U.S. heads of state, the dissemination of minor policy drafts related to real estate, and the issuance of work plans for the classification and disposal of coal mines with an annual capacity below 600,000 mt in provinces and cities such as Shaanxi provided positive expectations from both macro and industrial perspectives, leading to a collective strengthening of ferrous metals. In the latter part of the week, plans by Mongolia and Russia to increase coal exports to China resulted in a noticeable weakening of coking coal and coke, compounded by rumors of Vanke's restructuring, which contributed to a temporary bearish sentiment.

In 2025, steel mill profits significantly recovered. According to SMM data, as of November 27, the average spot profits for domestic blast furnace steel mills in east China were 90 yuan/mt for rebar, 170 yuan/mt for hot-rolled coil, and 308 yuan/mt for cold-rolled coil, with an average profit of 189 yuan/mt across the three products. However, the average was 96 yuan/mt in 2024, 152 yuan/mt in 2023, and even -19 yuan/mt in 2022. It is evident that compared to the period from 2022 to 2024, steel mill profits achieved a comprehensive recovery this year.

Conclusion: The supply-demand imbalance has accumulated to a relatively limited extent, with relatively small room for further deterioration MoM from November. In the short term, focus on the most-traded hot-rolled coil futures contract at 3,230–3,330. In December, coupled with rising macro expectations, steel prices may have room to rise before the meeting, but the upside is likely to be limited, mainly due to persistent destocking pressure for sheets & plates and relatively weak sales performance in the market, which may also constrain a smooth price increase.

According to SMM assessment, the 300 million tonnes crude steel capacity target set by India's "National Steel Policy (2017)" is expected to be only about 80% achieved, resulting in actual capacity of approximately 240 million tonnes by 2030. Against this backdrop, if India's steel consumption maintains a 7% average annual growth rate, while crude steel production, constrained by the pace of capacity realization, achieves only about a 5% growth rate, and considering an 85% capacity utilization rate, India's supply-demand gap will continue to widen, with the net import volume projected to reach 25.5 million tonnes by 2030. This trend indicates that the pace of India's steel capacity expansion will consistently struggle to match the robust growth of its domestic demand. Even during the period of concentrated capacity commissioning, its vast domestic market will still need to rely on imports to bridge the supply gap. Simultaneously, in the high-end steel sector, due to gaps in technological accumulation and process levels, India's structural dependence on high-value-added steel will persist long-term, forming a "new normal" of "continuously expanding total gap and difficult-to-improve high-end dependence."

During the survey period (November 18–November 24), rebar production in the central region decreased slightly; both wire rod production and rolling line operating rates also declined.

This week, ferrous metals mostly showed a pattern of rising first and then falling, with coking coal and coke exhibiting relatively weak performance. Over the weekend, the Ministry of Ecology and Environment announced that it would conduct one-month environmental protection checks in the Beijing-Tianjin-Hebei region this week. Finished products and raw materials performed differently, with iron ore showing strong support. In the latter part of the week, market rumors suggested that China is considering new real estate support policies, including options such as mortgage interest subsidies, leading to some fluctuations in ferrous metals during trading sessions. Fundamentally, the inventory of the five major steel products continued to decline but failed to provide strong support. Coupled with weakening raw material support, finished product prices gave back the gains made on Monday. In the spot market, amid the off-season, end-users continued to purchase as needed at low prices, with a small amount of speculative demand released at the beginning of the week.