Dream of "September Peak Season" Shattered as Hangzhou Building Materials Inventory Exceeds 1 Million mt

As of September 11, the inventory of construction steel in Hangzhou reached 1.006 million mt, up 116,000 mt WoW, an increase of 13.03% WoW and 112.24% YoY. The current inventory level has surpassed 1 million mt, approaching the winter stockpiling level of 2025.

I. Influx of Rebar Resources from Multiple Regions into Hangzhou, Significantly Increasing Building Materials Arrivals
Since mid-to-late August, due to differences in regional supply-demand patterns, surplus resources have gradually emerged in the construction steel markets of south China and southwest China. As a key consumer market for building materials in east China, Hangzhou has seen a large influx of external resources, leading to a rise in weekly arrivals of construction steel, far exceeding the actual consumption rate of end-use demand during the same period. The supply-demand balance has been gradually disrupted, and total inventory continues to break previous levels.
Chart-1: Hangzhou Building Materials Inventory, 2022-2025

II. Steel Mills Maintain Profit Margins, Overall Supply Scale Difficult to Reduce
Despite certain pressures in the overall market supply-demand pattern, driven by profits, steel mills have not shown significant willingness to actively cut production. Production enthusiasm remains at a relatively high level, with blast furnace operating rates and building materials production both maintained at relatively high levels. The steady production pace directly contributes to the persistently high overall supply of construction steel. As steel mills continue to produce and release resources, the volume of circulating resources in the market keeps increasing, further exacerbating pressure on the current supply-demand balance and laying the groundwork for the high level of building materials inventory.
Chart-2: Planned Rebar Production of Sample Jiangsu Steel Mills, 2024-2025

III. Weak Demand from Real Estate and Infrastructure, "September Peak Season" Expectations Somewhat Disappointed
Traditional peak season characteristics of "September peak season" are not yet evident, and improvements in funding for end-use projects remain limited. Ongoing real estate regulation policies have led to poor construction and resumption of housing projects, while infrastructure investment remains stable but with limited growth. Demand for building materials cannot be effectively released. End-user demand performance is overall satisfactory, with only low-priced resources seeing moderate transactions, while high-priced resources attract no interest, resulting in slow destocking speed across the market. Overall, the current actual shipment performance of the Hangzhou construction steel market falls short of the expected level for the traditional September peak season. End-user procurement pace has slowed down, and demand release remains insufficient, leading market inventory into a continuous accumulation phase. Supply side, although inventory pressure has gradually emerged, steel mills still maintain a certain profit margin, and their willingness to proactively cut production is relatively weak. Consequently, the overall market supply scale is unlikely to decline in the near term. Against this backdrop, if end-use demand fails to be effectively boosted, the supply-demand imbalance may further intensify. It is highly probable that Hangzhou's construction steel inventory will continue its current accumulation trend, and the supply-demand imbalance may face the risk of further escalation.